Table of the unearned portion of monthly billed service fees, prepayments made by customers for future periods, deferred integration and activation set-up fees and amounts billed under customer arrangements with extended payment terms.Contents

Accounts Receivable and Related Reserves

Trade accounts receivable are recorded at the invoiced amounts and do not bear interest. In addition to trade accounts receivable, our accounts receivable balance includes unbilled accounts that represent revenue recorded for customers that is typically billed within one month. We record ~~reserves~~allowances against our accounts receivable ~~balance. These reserves consist of allowances~~balance, primarily for ~~doubtful accounts and revenue from certain customers on a cash-basis.~~current expected credit losses. Increases and decreases in the allowance for ~~doubtful accounts~~current expected credit losses are included as a component of general and administrative expense in the consolidated statements of income. Increases in the reserve for cash-basis customers are recorded as a reduction of revenue. The reserve for cash-basis customers increases as services are provided to customers for which collection is no longer reasonably assured. The reserve decreases and revenue is recognized when and if cash payments are received.

Estimates are used in determining ~~these reserves and are based upon~~ our ~~review of~~allowance for current expected credit losses using historical loss rates for the previous twelve months as well as expectations about the future where we have been able to develop forecasts to supports our estimates. In addition, the allowance for current expected credit losses considers outstanding balances on a customer-specific, account-by-account basis. ~~The allowance for doubtful accounts is~~We assess collectability based upon a review of customer receivables from prior sales with collection issues where we no longer believe that the customer has the ability to pay for ~~prior~~ services previously provided. We also perform ongoing credit evaluations of our customers. If such an evaluation indicates that payment is no longer reasonably assured for services provided, any future services provided to that customer will result in the creation of a cash basis reserve until we receive consistent payments.

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Valuation and Impairment of Marketable Securities

We measure the fair value of our financial assets and liabilities at the end of each reporting period. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. We have certain financial assets and liabilities recorded at fair value (principally cash equivalents and short- and long-term marketable securities) that have been classified as Level 1, 2 or 3 within the fair value hierarchy. Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we can access at the reporting date. Fair values determined by Level 2 inputs utilize data points other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Fair values determined by Level 3 inputs are based on unobservable data points for the asset or liability.

Marketable securities are considered to be impaired when a decline in fair value below cost basis is determined to be other-than-temporary. We periodically evaluate whether a decline in fair value below cost basis is other-than-temporary by considering available evidence regarding these investments including, among other factors, the duration of the period that, and extent to which, the fair value is less than cost basis; the financial health of, and business outlook for, the issuer, including industry and sector performance and operational and financing cash flow factors; overall market conditions and trends; and our intent and ability to retain our investment in the security for a period of time sufficient to allow for an anticipated recovery in market value. Once a decline in fair value is determined to be other-than-temporary, a write-down is recorded and a new cost basis in the security is established. Assessing the above factors involves inherent uncertainty. Write-downs, if recorded, could be materially different from the actual market performance of marketable securities in our portfolio if, among other things, relevant information related to our investments and marketable securities was not publicly available or other factors not considered by us would have been relevant to the determination of impairment.

Impairment and Useful Lives of Long-Lived Assets

We review our long-lived assets, such as property and equipment, operating lease right-of-use assets and acquired intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Events that would trigger an impairment review include a change in the use of the asset or forecasted negative cash flows related to the asset. When such events occur, we compare the carrying amount of the asset to the undiscounted expected future cash flows related to the asset. If this comparison indicates that impairment is present, the amount of the impairment is calculated as the difference between the carrying amount and the fair value of the asset. If a readily determinable market price does not exist, fair value is estimated using discounted expected cash flows attributable to the asset. The estimates required to apply this accounting policy include forecasted usage of the long-lived assets, the useful lives of these assets and expected future cash flows. Changes in these estimates could materially impact results from operations.

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Goodwill and Acquired Intangible Assets

We test goodwill for impairment on an annual basis, as of December 31, or more frequently if events or changes in circumstances indicate that the asset might be impaired. We have concluded that we have one reporting unit and that our chief operating decision maker is our chief executive officer and the executive management team. We have assigned the entire balance of goodwill to our one reporting unit. The fair value of the reporting unit was based on our market capitalization as of each of December 31, ~~2017~~2021 and ~~2016~~,2020, and it was substantially in excess of the carrying value of the reporting unit at each date.

Acquired intangible assets consist of completed technologies, customer relationships, trademarks and trade names, non-compete agreements and acquired license rights. We engaged third party valuation specialists to assist us with the initial measurement of the fair value of acquired intangible assets. Acquired intangible assets, other than goodwill, are amortized over their estimated useful lives based upon the estimated economic value derived from the related intangible assets.

Income Taxes

Our provision for income taxes is comprised of a current and a deferred portion. The current income tax provision is calculated as the estimated taxes payable or refundable on tax returns for the current year. The deferred income tax provision is calculated for the estimated future tax effects attributable to temporary differences and carryforwards by using expected tax rates in effect in the years during which the differences are expected to reverse or the carryforwards are expected to be realized.

We currently have net deferred tax assets, comprised of net operating loss, or NOL, carryforwards, tax credit carryforwards and deductible temporary differences. Our management periodically weighs the positive and negative evidence to determine if it is ~~more likely than not~~more-likely-than-not that some or all of the deferred tax assets will be realized. In determining our net deferred tax assets

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and valuation allowances, annualized effective tax rates and cash paid for income taxes, management is required to make judgments and estimates about domestic and foreign profitability, the timing and extent of the utilization of NOL carryforwards, applicable tax rates, transfer pricing methodologies and tax planning strategies. Judgments and estimates related to our projections and assumptions are inherently uncertain; therefore, actual results could differ materially from our projections.

We have recorded certain tax reserves to address potential exposures involving our income tax positions. These potential tax liabilities result from the varying application of statutes, rules, regulations and interpretations by different taxing jurisdictions. Our estimate of the value of our tax reserves contains assumptions based on past experiences and judgments about the interpretation of statutes, rules and regulations by taxing jurisdictions. It is possible that the costs of the ultimate tax liability or benefit from these matters may be more or less than the amount that we estimated.

Uncertainty in income taxes is recognized in our consolidated financial statements using a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed more-likely-than-not to be sustained based on technical merit, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that we believe has a greater than 50% likelihood of being realized upon ultimate settlement.

The TCJA made significant changes to the U.S. Internal Revenue Code, including a corporate income tax rate decrease from 35% to 21%, the implementation of a modified territorial tax system, a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017 and the repeal of the domestic production activities deduction, among other items. The Securities and Exchange Commission, or the Commission, issued guidance for the accounting for certain income tax effects of the TCJA that allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date.

We have recognized the provisional impacts related to the one-time transition tax and the re-measurement of our deferred tax balances in our consolidated financial statements for the year ended December 31, 2017. The ultimate impact could materially differ from the provisional amounts we have recorded due to additional analysis, changes in assumptions or interpretations we have made, additional guidance that may be issued and actions we may take as a result of the TCJA. For the one-time transition tax, further information is required to finalize the estimated amount of accumulated foreign earnings as well as to validate the amount of earnings represented by the~~aggregate foreign cash position as defined in the TCJA. For the re-measurement of the deferred tax assets and~~liabilities, further analysis will be required to refine our calculations and related account balances. We expect to complete the analysis within the measurement period, and any subsequent adjustment to the provisional amounts will be recognized as a current tax provision or benefit in the quarter of 2018 in which the analysis is completed.

Accounting for Stock-Based Compensation

We issue stock-based compensation awards including stock options, restricted stock units and deferred stock units. We measure the fair value of these awards at the grant date and recognize such fair value as expense over the vesting period. We have selected the Black-Scholes option pricing model to determine the fair value of stock option awards and the Monte Carlo simulation model to determine the fair value of market-based restricted stock unit awards. Determining the fair value of stock-based awards at the grant date requires judgment, including estimating the expected life of the stock awards and the volatility of the underlying common stock. Our assumptions may differ from those used in prior periods. Changes to the assumptions may have a significant impact on the fair value of stock-based awards, which could have a material impact on our financial statements. Judgment is also required in estimating the number of stock-based awards that are expected to be forfeited. Should our actual forfeiture rates differ significantly from our estimates, our stock-based compensation expense and results of operations could be materially impacted. In addition, for awards that vest and become exercisable only upon achievement of specified performance conditions, we make judgments and estimates each quarter about the probability that such performance conditions will be met or achieved. Changes to the estimates we make from time to time may have a significant impact on our stock-based compensation expense and could materially impact our ~~result~~results of operations.

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Capitalized Internal-Use Software Costs

We capitalize salaries and related costs, including stock-based compensation, of employees and consultants who devote time to the development of internal-use software development projects, as well as interest expense related to our senior convertible notes. Capitalization begins during the application development stage, once the preliminary project stage has been completed. If a project constitutes an enhancement to previously-developed software, we assess whether the enhancement creates additional functionality to the software, thus qualifying the work incurred for capitalization. Once the project is available for general release, capitalization ceases and we estimate the useful life of the asset and begin amortization. We periodically assess whether triggering events are present to review internal-use software for impairment. Changes in our estimates related to internal-use software would increase or decrease operating expenses or amortization recorded during the period.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our portfolio of cash equivalents and short- and long-term investments is maintained in a variety of securities, including U.S. government agency obligations, high-quality corporate debt securities, commercial paper, mutual funds and money market funds. The majority of our investments are classified as available-for-sale securities and carried at fair market value with cumulative unrealized gains or losses recorded as a component of accumulated other comprehensive loss within stockholders' equity. A sharp rise in interest rates could have an adverse impact on the fair market value of certain securities in our portfolio. We do not currently hedge our interest rate exposure and do not enter into financial instruments for trading or speculative purposes. If market interest rates were to increase by 100 basis points from December 31, 2021 levels, the fair value of our available-for-sale portfolio would decline by approximately $17.7 million.

In August 2019, we issued $1,150.0 million aggregate principal amount of 0.375% convertible senior notes due 2027. In May 2018, we issued $1,150.0 million aggregate principal amount of 0.125% convertible senior notes due 2025. As these notes have a fixed annual interest rate, we have no financial or economic interest exposure associated with changes in interest rates. However, the fair value of fixed rate debt instruments fluctuates when interest rates change. Additionally, the fair value can be affected when the market price of our common stock fluctuates. We carry the notes at face value less an unamortized discount on our consolidated balance sheet, and we present the fair value for required disclosure purposes only.

Foreign Currency Risk

Growth in our international operations will incrementally increase our exposure to foreign currency fluctuations as well as other risks typical of international operations that could impact our business, including, but not limited to, differing economic conditions, changes in political climate, differing tax structures and other regulations and restrictions. A hypothetical 10% strengthening or weakening in the value of the U.S. dollar relative to the foreign currencies in which our revenues and expenses are denominated would not result in a material impact to our consolidated financial statements.

Transaction Exposure

Foreign exchange rate fluctuations may adversely impact our consolidated results of operations as exchange rate fluctuations on transactions denominated in currencies other than functional currencies result in gains and losses that are reflected in our consolidated statements of income. We enter into short-term foreign currency forward contracts to offset foreign exchange gains and losses generated by the re-measurement of certain assets and liabilities recorded in non-functional currencies. Changes in the fair value of these derivatives, as well as re-measurement gains and losses, are recognized in our consolidated statements of income within other income (expense), net. Foreign currency transaction gains and losses from these forward contracts were determined to be immaterial during the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015.~~2019. We do not enter into derivative financial instruments for trading or speculative purposes.

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Translation Exposure

To the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency-denominated transactions will result in increased revenue and operating expenses. Conversely, our revenue and operating expenses will decrease when the U.S. dollar strengthens against foreign currencies.

Foreign exchange rate fluctuations may also adversely impact our consolidated financial condition as the assets and liabilities of our foreign operations are translated into U.S. dollars in preparing our consolidated balance sheet. These gains or losses are recorded as a component of accumulated other comprehensive loss within stockholders' equity.

Credit Risk

Concentrations of credit risk with respect to accounts receivable are limited to certain customers to which we make substantial sales. Our customer base consists of a large number of geographically dispersed customers diversified across numerous industries. We believe that our accounts receivable credit risk exposure is limited. As of December 31, ~~2017 and 2016,~~2021, there was one customer with an accounts receivable balance greater than 10% of our accounts receivable. As of December 31, 2020, no customer had an accounts receivable balance of 10% or more of our accounts receivable. We believe that at December 31, ~~2017,~~2021, the concentration of credit risk related to accounts receivable was insignificant.

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Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Akamai Technologies, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Akamai Technologies, Inc. and its subsidiaries (the “Company”) as of December 31, ~~2017~~2021 and ~~2016,~~2020, and the related consolidated statements of income, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, ~~2017,~~2021, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, ~~2017,~~2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, ~~2017~~2021 and ~~2016,~~2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2017~~2021 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2017,~~2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

~~Change in Accounting Principle~~

~~As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for share-based payments in 2017.~~

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in ~~Management's~~Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ~~("PCAOB")~~(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit

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preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Completed Technologies – Acquisition of Guardicore Ltd.

As described in Notes 2 and 8 to the consolidated financial statements, in October 2021, the Company acquired Guardicore Ltd. (“Guardicore”) for $610.4 million in cash, which resulted in completed technologies of $79.0 million being recorded. Management applied (i) the relief-from-royalty method to estimate the fair value of the completed technologies acquired and (ii) significant judgment in estimating the fair value of acquired intangible assets, which involved significant estimates and assumptions with respect to forecasted revenue growth rates and the discount rate.

The principal considerations for our determination that performing procedures relating to the valuation of completed technologies acquired in connection with the Guardicore acquisition is a critical audit matter are (i) the significant judgment by management when determining the fair value of the completed technologies intangible assets acquired; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to forecasted revenue growth rates and the discount rate; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the completed technologies intangible assets and controls over the development of significant assumptions related to forecasted revenue growth rates and the discount rate. These procedures also included, among others, (i) reading the purchase agreement; (ii) testing management’s process for determining the fair value of the completed technologies intangible assets; (iii) evaluating the appropriateness of the relief-from-royalty method; (iv) testing the completeness and accuracy of the underlying data used in the method; and (v) evaluating the reasonableness of the significant assumptions used by management related to forecasted revenue growth rates and the discount rate. Evaluating management’s significant assumptions related to forecasted revenue growth rates involved evaluating whether the significant assumptions used by management were reasonable considering (i) the current and past performance of Guardicore; (ii) consistency with external market and industry data; and (iii) whether these significant assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s relief-from-royalty method and the discount rate assumption.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

~~March 1, 2018~~February 28, 2022

We have served as the Company’s auditor since 1998.

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AKAMAI TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS


(in thousands, except share data)	December 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	536,725	$	352,917
Marketable securities	541,470		745,156
Accounts receivable, net of reserves of $1,397 and $1,822 at December 31, 2021 and 2020, respectively	675,926		660,052
Prepaid expenses and other current assets	166,313		171,406
Total current assets	1,920,434		1,929,531
Marketable securities	1,088,048		1,398,802
Property and equipment, net	1,534,329		1,478,272
Operating lease right-of-use assets	815,754		793,945
Acquired intangible assets, net	313,225		234,724
Goodwill	2,156,254		1,674,371
Deferred income tax assets	168,342		106,918
Other assets	142,287		147,567
Total assets	$	8,138,673	$	7,764,130
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	109,928	$	118,546
Accrued expenses	411,590		380,468
Deferred revenue	86,517		76,600

Operating lease liabilities	175,683		154,801
Other current liabilities	6,623		27,755
Total current liabilities	790,341		758,170
Deferred revenue	25,342		5,262
Deferred income tax liabilities	40,974		37,458
Convertible senior notes	1,976,167		1,906,707
Operating lease liabilities	707,087		715,404
Other liabilities	68,748		89,833
Total liabilities	3,608,659		3,512,834
Commitments and contingencies (Note 13)	0		0
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 700,000 shares designated as Series A Junior Participating Preferred Stock; no shares issued or outstanding	—		—
Common stock, $0.01 par value; 700,000,000 shares authorized; 160,512,111 and 162,709,720 shares issued and outstanding at December 31, 2021 and 2020, respectively	1,605		1,627
Additional paid-in capital	3,340,822		3,664,820
Accumulated other comprehensive loss	(69,105)		(20,201)
Retained earnings	1,256,692		605,050
Total stockholders’ equity	4,530,014		4,251,296
Total liabilities and stockholders’ equity	$	8,138,673	$	7,764,130

(in thousands, except share data) December 31, 2017 December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents $ 313,382
$ 324,169
Marketable securities 398,554
512,849
Accounts receivable, net of reserves of $1,279 and $6,145 at December 31, 2017 and 2016, respectively 459,127
368,596
Prepaid expenses and other current assets 137,809
104,303
Total current assets 1,308,872
1,309,917
Property and equipment, net 862,535
801,017
Marketable securities 567,592
779,311
Goodwill 1,498,688
1,228,503
Acquired intangible assets, net 201,259
149,463
Deferred income tax assets 51,069
8,982
Other assets 112,829
95,953
Total assets $ 4,602,844
$ 4,373,146
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 80,278
$ 76,120
Accrued expenses 283,743
238,777
Deferred revenue 77,705
52,972
Other current liabilities 22,178
6,719
Total current liabilities 463,904
374,588
Deferred revenue 6,839
3,758
Deferred income tax liabilities 15,510
11,652
Convertible senior notes 662,913
640,087
Other liabilities 142,955
118,691
Total liabilities 1,292,121
1,148,776
Commitments and contingencies (Note 12)

Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 700,000 shares designated as Series A Junior Participating Preferred Stock; no shares issued or outstanding —
—
Common stock, $0.01 par value; 700,000,000 shares authorized; 169,893,324 and 173,254,797 shares issued and outstanding at December 31, 2017 and 2016, respectively 1,699
1,733
Additional paid-in capital 4,073,362
4,239,588
Accumulated other comprehensive loss (21,930 ) (56,222 )
Accumulated deficit (742,408 ) (960,729 )
Total stockholders’ equity 3,310,723
3,224,370
Total liabilities and stockholders’ equity $ 4,602,844
$ 4,373,146

The accompanying notes are an integral part of the consolidated financial statements.

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AKAMAI TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF INCOME


(in thousands, except per share data)	For the Years Ended December 31,
	2021		2020		2019
Revenue	$	3,461,223	$	3,198,149	$	2,893,617
Costs and operating expenses:
Cost of revenue (exclusive of amortization of acquired intangible assets shown below)	1,268,956		1,132,672		987,624
Research and development	335,372		269,315		261,365
Sales and marketing	461,967		510,405		523,883
General and administrative	553,024		547,888		516,093
Amortization of acquired intangible assets	48,019		42,049		38,581
Restructuring charge	10,737		37,286		17,153
Total costs and operating expenses	2,678,075		2,539,615		2,344,699
Income from operations	783,148		658,534		548,918
Interest income	15,620		29,122		34,355
Interest expense	(72,332)		(69,120)		(49,364)
Other income (expense), net	1,785		(2,454)		(1,428)
Income before provision for income taxes	728,221		616,082		532,481
Provision for income taxes	(62,571)		(45,922)		(53,350)
Loss from equity method investment	(14,008)		(13,106)		(1,096)
Net income	$	651,642	$	557,054	$	478,035
Net income per share:
Basic	$	4.01	$	3.43	$	2.94
Diluted	$	3.93	$	3.37	$	2.90
Shares used in per share calculations:
Basic	162,665		162,490		162,706
Diluted	165,804		165,213		164,573

(in thousands, except per share data) For the Years Ended December 31,
2017 2016 2015
Revenue $ 2,502,996
$ 2,340,049
$ 2,197,448
Costs and operating expenses:
Cost of revenue (exclusive of amortization of acquired intangible assets shown below) 875,758
809,001
725,620
Research and development 222,434
167,628
148,591
Sales and marketing 493,632
426,967
440,988
General and administrative 509,165
439,916
388,265
Amortization of acquired intangible assets 30,904
26,642
27,067
Restructuring charges 54,884
10,301
767
Total costs and operating expenses 2,186,777
1,880,455
1,731,298
Income from operations 316,219
459,594
466,150
Interest income 17,855
14,702
11,200
Interest expense (18,839 ) (18,638 ) (18,525 )
Other income (expense), net 887
3,788
(2,201 )
Income before provision for income taxes 316,122
459,446
456,624
Provision for income taxes 97,801
143,314
135,218
Net income $ 218,321
$ 316,132
$ 321,406
Net income per share:
Basic $ 1.27
$ 1.81
$ 1.80
Diluted $ 1.26
$ 1.79
$ 1.78
Shares used in per share calculations:
Basic 171,559
174,917
178,391
Diluted 172,711
176,215
180,415

The accompanying notes are an integral part of the consolidated financial statements.

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AKAMAI TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	For the Years Ended December 31,
(in thousands)	2021		2020		2019
Net income	$	651,642	$	557,054	$	478,035
Other comprehensive (loss) income:
Foreign currency translation adjustments	(38,514)		19,629		(1,020)
Change in unrealized (loss) gain on investments, net of income tax (benefit) provision of $(3,412), $2,720 and $666 for the years ended December 31, 2021, 2020 and 2019, respectively	(10,390)		5,314		4,788
Other comprehensive (loss) income	(48,904)		24,943		3,768
Comprehensive income	$	602,738	$	581,997	$	481,803

For the Years Ended December 31,
(in thousands) 2017 2016 2015
Net income $ 218,321
$ 316,132
$ 321,406
Other comprehensive income (loss):
Foreign currency translation adjustments 34,698
(14,081 ) (22,872 )
Change in unrealized loss on investments, net of income tax benefit of $245, $432 and $773 for the years ended December 31, 2017, 2016 and 2015, respectively (406 ) (688 ) (970 )
Other comprehensive income (loss) 34,292
(14,769 ) (23,842 )
Comprehensive income $ 252,613
$ 301,363
$ 297,564

The accompanying notes are an integral part of the consolidated financial statements.

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AKAMAI TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


(in thousands)	For the Years Ended December 31,
	2021		2020		2019
Cash flows from operating activities:
Net income	$	651,642	$	557,054	$	478,035
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	550,632		478,389		440,674
Stock-based compensation	202,759		197,411		187,140
(Benefit) provision for deferred income taxes	(47,794)		(33,821)		933
Amortization of debt discount and issuance costs	66,025		62,823		45,857
Other non-cash reconciling items, net	21,823		23,027		8,528
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(24,096)		(90,381)		(64,471)
Prepaid expenses and other current assets	4,034		(25,395)		11,689
Accounts payable and accrued expenses	31,523		39,211		8,769
Deferred revenue	(2,865)		(1,318)		(13,547)
Other current liabilities	(20,404)		18,101		(17,230)
Other non-current assets and liabilities	(28,716)		(10,101)		(28,073)
Net cash provided by operating activities	1,404,563		1,215,000		1,058,304
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired	(598,825)		(127,999)		(165,329)
Cash paid for asset acquisition	—		(36,376)		—
Cash paid for equity method investment	—		—		(36,008)
Purchases of property and equipment	(328,969)		(514,313)		(359,667)
Capitalization of internal-use software development costs	(216,261)		(217,559)		(202,410)
Purchases of short-and long-term marketable securities	(932,604)		(1,782,849)		(1,990,148)
Proceeds from sales of short-and long-term marketable securities	442,133		30,350		856
Proceeds from maturities and redemptions of short-and long-term marketable securities	991,949		1,597,651		1,084,373
Other, net	(4,322)		8,121		399
Net cash used in investing activities	(646,899)		(1,042,974)		(1,667,934)
Cash flows from financing activities:
Proceeds from the issuance of convertible senior notes	—		—		1,135,629
Proceeds from the issuance of warrants	—		—		185,150
Purchase of note hedge related to convertible senior notes	—		—		(312,225)
Repayment of convertible senior notes	—		—		(690,000)
Proceeds related to the issuance of common stock under stock plans	59,632		59,775		57,112
Employee taxes paid related to net share settlement of stock-based awards	(99,112)		(89,828)		(75,266)
Repurchases of common stock	(522,255)		(193,588)		(334,519)
Other, net	(268)		—		(1,558)
Net cash used in financing activities	(562,003)		(223,641)		(35,677)
Effects of exchange rate changes on cash, cash equivalents and restricted cash	(11,376)		10,935		2,466
Net increase (decrease) in cash, cash equivalents and restricted cash	184,285		(40,680)		(642,841)
Cash, cash equivalents and restricted cash at beginning of year	353,466		394,146		1,036,987
Cash, cash equivalents and restricted cash at end of year	$	537,751	$	353,466	$	394,146

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(in thousands) For the Years Ended December 31,
2017 2016 2015
Cash flows from operating activities:
Net income $ 218,321
$ 316,132
$ 321,406
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 372,313
334,302
299,563
Stock-based compensation 164,308
144,506
126,677
(Benefit) provision for deferred income taxes (869 ) 7,308
4,098
Amortization of debt discount and issuance costs 18,839
18,638
18,525
Restructuring-related software charges 31,965
4,587
—
Other non-cash reconciling items, net 10,068
5,987
5,804
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable (63,825 ) 3,356
(56,247 )
Prepaid expenses and other current assets (22,311 ) 23,881
7,137
Accounts payable and accrued expenses 33,232
18,491
51,624
Deferred revenue 1,142
(1,213 ) 3,224
Other current liabilities 16,378
5,484
(345 )
Other non-current assets and liabilities 21,422
(9,647 ) 11,986
Net cash provided by operating activities 800,983
871,812
793,452
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired (369,073 ) (95,439 ) (141,147 )
Purchases of property and equipment (254,146 ) (180,949 ) (311,676 )
Capitalization of internal-use software development costs (160,632 ) (135,340 ) (133,307 )
Purchases of short- and long-term marketable securities (326,497 ) (781,061 ) (692,879 )
Proceeds from sales of short and long-term marketable securities 219,916
57,740
2,008
Proceeds from maturities of short and long-term marketable securities 432,853
664,837
843,931
Other non-current assets and liabilities (2,098 ) 782
(2,494 )
Net cash used in by investing activities (459,677 ) (469,430 ) (435,564 )
Cash flows from financing activities:
Proceeds related to the issuance of common stock under stock plans 55,680
59,560
61,791
Employee taxes paid related to net share settlement of stock-based awards (58,395 ) (45,545 ) (54,164 )
Repurchases of common stock (361,194 ) (373,794 ) (302,606 )
Other non-current assets and liabilities (1,096 ) —
(2,050 )
Net cash used in financing activities (365,005 ) (359,779 ) (297,029 )
Effects of exchange rate changes on cash and cash equivalents 12,912
(7,907 ) (10,036 )
Net (decrease) increase in cash and cash equivalents (10,787 ) 34,696
50,823
Cash and cash equivalents at beginning of year 324,169
289,473
238,650
Cash and cash equivalents at end of year $ 313,382
$ 324,169
$ 289,473

Supplemental disclosure of cash flow information:
Cash paid for income taxes, net of refunds received in the years ended December 31, 2017, 2016 and 2015 of $6,750, $1,664 and $19,374, respectively $ 91,640
$ 120,223
$ 75,033
Non-cash financing and investing activities:
Purchases of property and equipment and capitalization of internal-use software development costs included in accounts payable and accrued expenses $ 27,209
$ 36,742
$ 19,327
Capitalization of stock-based compensation $ 28,851
$ 23,093
$ 17,867
AKAMAI TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS, continued


(in thousands)	For the Years Ended December 31,
	2021		2020		2019
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net of refunds received in the years ended December 31, 2021, 2020 and 2019 of $14,808, $17,491 and $3,731, respectively	$	100,533	$	79,163	$	73,898
Cash paid for interest expense	5,750		5,954		1,438
Cash paid for operating lease liabilities	224,085		201,856		153,818
Non-cash activities:
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	218,753		200,735		529,376
Purchases of property and equipment and capitalization of internal-use software development costs included in accounts payable and accrued expenses	63,309		75,666		88,238
Capitalization of stock-based compensation	36,545		38,333		35,905

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	536,725	$	352,917	$	393,745
Restricted cash	1,026		549		401
Cash, cash equivalents and restricted cash	$	537,751	$	353,466	$	394,146

The accompanying notes are an integral part of the consolidated financial statements.

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AKAMAI TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data) Common Stock Additional Paid-in Capital Treasury Stock Accumulated Other Comprehensive Loss
Accumulated
Deficit
Total Stockholders' Equity
Shares Amount
Balance at December 31, 2014 178,300,603
$ 1,783
$ 4,559,430
$ —
$ (17,611 ) $ (1,598,267 ) $ 2,945,335
Issuance of common stock upon the exercise of stock options and vesting of restricted and deferred stock units, net of shares withheld for employee taxes 2,756,357
27
(27,697 ) (27,670 )
Issuance of common stock under employee stock purchase plan 668,654
7
34,834
34,841
Stock-based compensation 144,544
144,544
Tax benefit from stock-based award activity, net 28,870
28,870
Repurchases of common stock (4,513,433 )

(302,606 )

(302,606 )
Treasury stock retirement (45 ) (302,561 ) 302,606
—
Net income 321,406
321,406
Foreign currency translation adjustment (22,872 ) (22,872 )
Change in unrealized gain on investments, net of tax (970 ) (970 )
Balance at December 31, 2015 177,212,181
1,772
4,437,420
—
(41,453 ) (1,276,861 ) 3,120,878
Issuance of common stock upon the exercise of stock options and vesting of restricted and deferred stock units, net of shares withheld for employee taxes 2,194,699
22
(27,416 ) (27,394 )
Issuance of common stock under employee stock purchase plan 863,419
9
39,905
39,914
Stock-based compensation 166,987
166,987
Tax deficiency from stock-based award activity, net

(3,584 ) (3,584 )
Repurchases of common stock (7,015,502 )

(373,794 ) (373,794 )
Treasury stock retirement (70 ) (373,724 ) 373,794
—
Net income 316,132
316,132
Foreign currency translation adjustment (14,081 ) (14,081 )
Change in unrealized gain on investments, net of tax (688 ) (688 )
Balance at December 31, 2016 173,254,797
$ 1,733
$ 4,239,588
$ —
$ (56,222 ) $ (960,729 ) $ 3,224,370


(in thousands, except share data)	Common Stock			Additional Paid-in Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings (Accumulated Deficit)		Total Stockholders' Equity
	Shares	Amount
Balance at January 1, 2019	162,904,550	$	1,629	$	3,670,033	$	—	$	(48,912)	$	(430,890)	$	3,191,860
Cumulative-effect adjustment to accumulated deficit related to adoption of new accounting pronouncement										851		851
Issuance of common stock upon the exercise of stock options and vesting of restricted and deferred stock units, net of shares withheld for employee taxes	2,251,840	22		(72,350)								(72,328)
Issuance of common stock under employee stock purchase plan	879,648	9		53,680								53,689
Stock-based compensation				222,857								222,857

Equity component of convertible senior notes, net of deferred tax of $23,170 and issuance costs of $2,880				240,820								240,820
Issuance of warrants related to convertible senior notes				185,150								185,150
Purchase of note hedge related to convertible senior notes				(312,225)								(312,225)
Repurchases of common stock	(4,035,195)					(334,519)						(334,519)
Treasury stock retirement		(40)		(334,479)		334,519						—
Net income										478,035		478,035
Foreign currency translation adjustment								(1,020)				(1,020)
Change in unrealized gain on investments, net of tax								4,788				4,788
Balance at December 31, 2019	162,000,843	$	1,620	$	3,653,486	$	—	$	(45,144)	$	47,996	$	3,657,958

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AKAMAI TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY, continued


(in thousands, except share data)	Common Stock					Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders' Equity			(in thousands, except share data)	Common Stock			Additional Paid-in Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity
	Shares		Amount																			Shares	Amount
Balance at December 31, 2016	173,254,797		$	1,733		$	4,239,588		$	—		$	(56,222	)	$	(960,729	)	$	3,224,370
Balance at December 31, 2019																					Balance at December 31, 2019	162,000,843	$	1,620	$	3,653,486	$	—	$	(45,144)	$	47,996	$	3,657,958

Issuance of common stock upon the exercise of stock options and vesting of restricted and deferred stock units, net of shares withheld for employee taxes																					Issuance of common stock upon the exercise of stock options and vesting of restricted and deferred stock units, net of shares withheld for employee taxes	1,949,963	20		(89,122)								(89,102)
Issuance of common stock under employee stock purchase plan																					Issuance of common stock under employee stock purchase plan	723,600	7		58,395								58,402
Stock-based compensation																					Stock-based compensation				235,629								235,629

Repurchases of common stock																					Repurchases of common stock	(1,964,686)					(193,588)						(193,588)
Treasury stock retirement																					Treasury stock retirement		(20)		(193,568)		193,588						—
Net income																					Net income										557,054		557,054
Foreign currency translation adjustment																					Foreign currency translation adjustment								19,629				19,629
Change in unrealized gain on investments, net of tax																					Change in unrealized gain on investments, net of tax								5,314				5,314
Balance at December 31, 2020																					Balance at December 31, 2020	162,709,720	1,627		3,664,820		—		(20,201)		605,050		4,251,296

Issuance of common stock upon the exercise of stock options and vesting of restricted and deferred stock units, net of shares withheld for employee taxes	2,453,961		24			(40,562		)										(40,538		)	Issuance of common stock upon the exercise of stock options and vesting of restricted and deferred stock units, net of shares withheld for employee taxes	1,902,742	18		(99,774)								(99,756)
Issuance of common stock under employee stock purchase plan	1,052,684		11			42,291												42,302			Issuance of common stock under employee stock purchase plan	648,686	7		59,707								59,714
Stock-based compensation						193,170												193,170			Stock-based compensation				238,277								238,277
Repurchases of common stock	(6,868,118	)							(361,194		)							(361,194		)	Repurchases of common stock	(4,749,037)					(522,255)						(522,255)
Treasury stock retirement			(69		)	(361,125		)	361,194									—			Treasury stock retirement		(47)		(522,208)		522,255						—
Net income															218,321			218,321			Net income										651,642		651,642
Foreign currency translation adjustment												34,698						34,698			Foreign currency translation adjustment								(38,514)				(38,514)
Change in unrealized gain on investments, net of tax												(406		)				(406		)
Balance at December 31, 2017	169,893,324		$	1,699		$	4,073,362		$	—		$	(21,930	)	$	(742,408	)	$	3,310,723
Change in unrealized loss on investments, net of tax																					Change in unrealized loss on investments, net of tax								(10,390)				(10,390)
Balance at December 31, 2021																					Balance at December 31, 2021	160,512,111	$	1,605	$	3,340,822	$	—	$	(69,105)	$	1,256,692	$	4,530,014

The accompanying notes are an integral part of the consolidated financial statements.

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AKAMAI TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Basis of Presentation

Akamai Technologies, Inc. (the “Company”) provides ~~cloud services for delivering, optimizing~~solutions to power and ~~securing content and business applications over the Internet. The Company's~~protect digital experiences. Its globally-distributed platform comprises more than ~~200,000~~350,000 servers across more than 130 countries. The Company was incorporated in Delaware in 1998 and is headquartered in Cambridge, Massachusetts. The Company is currently organized and operates ~~in one~~as 1 reportable and operating segment: providing ~~cloud services for delivering, optimizing~~solutions to power and ~~securing content and business applications over the Internet.~~protect digital experiences.

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in the accompanying consolidated financial statements. ~~The Company has reclassified certain line items within cash flows from operating activities in its consolidated statements of cash flows to conform to current year presentation.~~

2. Summary of Significant Accounting Policies

Use of Estimates

The Company prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. These principles require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the amounts disclosed in the related notes to the consolidated financial statements. Actual results and outcomes may differ materially from management’s estimates, judgments and assumptions. Significant estimates, judgments and assumptions used in these financial statements include, but are not limited to, those related to revenue, accounts receivable and related reserves, valuation and impairment of investments and marketable securities, valuation and useful lives of acquired intangible assets, useful lives and realizability of long-lived assets, capitalized internal-use software development costs, income tax reserves and accounting for stock-based compensation. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. The effects of material revisions in estimates are reflected in the consolidated financial statements prospectively from the date of the change in estimate.

Cash, Cash Equivalents and Marketable Securities

Cash and cash equivalents consist of cash held in bank deposit accounts and short-term, highly-liquid investments with remaining maturities of three months or less at the date of purchase. Marketable securities consist of corporate, government and other securities. Securities having remaining maturities of less than one year from the date of the balance sheet are classified as short-term, and those with maturities of more than one year from the date of the balance sheet are classified as long-term in the consolidated balance ~~sheet.~~sheets.

The Company classifies its debt securities with readily determinable market values as available-for-sale. These investments are classified as marketable securities on the consolidated balance sheets and are carried at fair market value, with unrealized gains and losses considered to be temporary in nature and reported as accumulated other comprehensive loss, a separate component of stockholders’ equity. The Company reviews all investments for reductions in fair value that are other-than-temporary. When such reductions occur, the cost of the investment is adjusted to fair value through recording a loss on investments in the consolidated statements of income. Gains and losses on investments are calculated on the basis of specific identification.

Marketable securities are considered to be impaired when a decline in fair value below cost basis is determined to be other-than-temporary. The Company periodically evaluates whether a decline in fair value below cost basis is other-than-temporary by considering available evidence regarding these investments including, among other factors: the duration of the period that, and extent to which, the fair value is less than cost basis; the financial health and business outlook of the issuer, including industry and sector performance and operational and financing cash flow factors; overall market conditions and trends; and the Company’s intent and ability to retain its investment in the security for a period of time sufficient to allow for an anticipated recovery in market value. Once a decline in fair value is determined to be other-than-temporary, a write-down is recorded and a new cost basis in the security is established. Assessing the above factors involves inherent uncertainty. Write-downs, if recorded, could be materially different from the actual market performance of marketable securities in the Company’s portfolio if, among other things, relevant information related to the marketable securities was not publicly available or other factors not considered by the Company would have been relevant to the determination of impairment.

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Accounts Receivable and Related Reserves

The Company’s accounts receivable balance includes unbilled amounts that represent revenue recorded for customers that are typically billed monthly in arrears. The Company records reserves against its accounts receivable ~~balance. These reserves consist~~balance which primarily consists of allowances for ~~doubtful accounts and reserves for cash-basis customers.~~current expected credit losses. Increases and decreases in the allowance for ~~doubtful accounts~~current expected credit losses are included as a component of general and administrative expense in the consolidated statements of income. The ~~Company’s reserve~~allowance for ~~cash-basis customers increases~~current expected credit losses has been developed using historical loss rates for the previous twelve months as ~~services are provided~~well as expectations about the future where the Company has been able to ~~customers where collection is no longer assured. Increases~~develop forecasts to support its estimates. In addition, the ~~reserve for cash-basis customers are recorded as reductions of revenue. The reserve decreases and revenue is recognized when and if cash payments are received.~~

~~Estimates are used in determining these reserves and are based upon the Company’s review of~~allowance considers outstanding balances on a customer-specific, account-by-account basis. The ~~allowance for doubtful accounts is~~Company assesses collectibility based upon a review of customer receivables from prior sales with collection issues where the Company no longer believes that the customer has the ability to pay for services previously provided. The Company also performs ongoing credit evaluations of its customers. If such an evaluation indicates that payment is no longer reasonably assured for services provided, any future services provided to that customer will result in the creation of a cash-basis reserve until the Company receives consistent payments. The Company does not have any off-balance sheet credit exposure related to its customers.

Incremental Costs to Obtain a Contract with a Customer

The Company capitalizes incremental costs associated with obtaining customer contracts, specifically certain commission and incentive payments. The Company pays commissions and incentives up-front based on contract value upon signing a new arrangement with a customer and upon renewal and upgrades of existing contracts with customers if the renewal and upgrades result in an incremental increase in contract value. To the extent commissions and incentives are earned, the expenses, including estimated payroll taxes, are deferred on the Company's consolidated balance sheet and amortized over the expected life of the customer arrangement on a straight-line basis. Based on the nature of the Company's unique technology and services, and the rate at which the Company continually enhances and updates its technology, the expected life of the customer arrangement is determined to be approximately three years. Additionally, the Company may pay commissions and incentives based upon contract value, rather than incremental increase in contract value, to certain sales groups within the Company. For these commission arrangements, the Company amortizes capitalized costs for contract renewals over an average renewal contract period of 16 months. The Company also incurs commission expense on an ongoing basis based upon revenue recognized. In these cases, no incremental costs are deferred, as the commissions are earned and expensed in the same period for which the associated revenue is recognized.

Amortization of the costs is primarily included in sales and marketing expense in the consolidated statements of income. The current portion of deferred commission and incentive payments is included in prepaid expenses and other current assets, and the long-term portion is included in other assets on the Company's consolidated balance sheets.

Concentrations of Credit Risk

The amounts reflected in the consolidated balance sheets for accounts receivable, other current assets, accounts payable, accrued liabilities and other current liabilities approximate fair values due to their short-term maturities. The Company maintains the majority of its cash, cash equivalents and marketable securities with major financial institutions that the Company believes to be of high credit standing. The Company believes that, as of December 31, ~~2017,~~2021, its concentration of credit risk related to cash equivalents and marketable securities was not significant.

Concentrations of credit risk with respect to accounts receivable are primarily limited to certain customers to which the Company makes substantial sales. The Company’s customer base consists of a large number of geographically-dispersed customers diversified across several industries. To reduce risk, the Company routinely assesses the financial strength of its customers. Based on such assessments, the Company believes that its accounts receivable credit risk exposure is limited. For the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015,~~2019, no customer accounted for more than 10% of total revenue. As of December 31, ~~2017~~2021, there was one customer with an accounts receivable balance greater than 10% of total accounts receivable, and ~~2016,~~as of December 31, 2020, no customer had an accounts receivable balance greater than 10% of total accounts receivable. The Company believes that, as of December 31, ~~2017,~~2021, its concentration of credit risk related to accounts receivable was not significant.

Fair Value of Financial Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company has certain financial assets and liabilities recorded at fair value, principally cash equivalents

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and short- and long-term marketable securities that have been classified as Level 1, 2 or 3 within the fair value hierarchy. Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the reporting date. Fair values determined by Level 2 inputs utilize data points other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Fair values determined by Level 3 inputs are based on unobservable data points for the asset or liability.

Property and Equipment

Property and equipment are recorded at cost, net of accumulated depreciation and amortization. Property and equipment generally include purchases of items with a per-unit value greater than $1,000 and an estimated useful life greater than one year. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the related lease terms or their estimated useful lives.

The Company periodically reviews the estimated useful lives of property and ~~equipment, and any changes~~equipment. Changes to the estimated useful lives are recorded prospectively from the date of the change.

Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is included in income from operations. Repairs and maintenance costs are expensed as incurred.

Operating Leases

The Company enters into operating leases for real estate assets related to office space and co-location assets related to space or racks at co-location facilities and related equipment for its servers and other networking equipment. The Company determines if an arrangement contains a lease at the inception of a contract by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration and the right to obtain the economic benefits from the use of the identified asset.

Upon commencement of a lease, the Company records a right-of-use asset that represents the Company’s right to use the underlying asset for the lease term and a lease liability that represents an obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Lease payments are discounted at the lease commencement date. As the Company’s leases do not provide an implicit rate, an incremental borrowing rate has been applied based on the Company's credit-adjusted risk-free rate.

The Company often enters into contracts that contain both lease and non-lease components. Real estate non-lease components include real estate taxes, insurance, maintenance, parking and other operating costs. Co-location non-lease components include utilities and other operating costs. The Company includes both lease and non-lease components of fixed costs in its lease arrangements as a single lease component. Variable costs, such as utilities based on actual usage, are not included in the measurement of right-of-use assets and lease liabilities but are expensed when the event determining the amount of variable consideration to be paid occurs.

The Company’s lease terms often include renewal options and, particularly in the case of co-location arrangements, may include evergreen provisions. The Company’s right-of-use assets and lease liabilities generally do not include the options to extend, or terminate, unless it is reasonably certain that the Company will exercise these options. The Company has elected to exclude leases for certain networking equipment with terms of 12 months or less from its right-of-use assets and lease liabilities on its consolidated balance sheet.

Lease expense is recognized on a straight-line basis over the expected lease term.

Equity Method Investments

The Company accounts for equity investments in which it has significant influence, but not a controlling financial interest, using the equity method of accounting. Under the equity method of accounting, investments are initially recorded at cost, less impairment, and subsequently adjusted to recognize the Company’s share of earnings or losses.

In February 2019, the Company and Mitsubishi UFJ Financial Group ("MUFG") announced the establishment of a joint venture, the Global Open Network, Inc. ("GO-NET"), and their plans to offer a new blockchain-based online payment network. The Company's 20% stake in GO-NET is accounted for using the equity method.

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As of December 31, 2021, the Company's $7.5 million investment is included in other assets on the consolidated balance sheet. The Company recorded a loss of $13.1 million during the year ended December 31, 2020, which included an $11.0 million impairment to reduce the Company's investment to its fair value due to a modified business plan and continued negative projected cash flows. The valuation technique used to measure fair value of the Company's equity method investment in GO-NET was primarily an adjusted net asset value model based on labor costs and the amount of time required to develop a similar technology for use in the planned payment processing service. The Company recorded a loss of $14.0 million and $1.1 million during the years ended December 31, 2021 and 2019, respectively, which reflects its share of the losses incurred by GO-NET during those years. Subsequent to the establishment of the joint venture, the Company recorded revenue of $10.1 million, $11.1 million and $11.6 million for the years ended December 31, 2021, 2020 and 2019, respectively, for services provided to GO-NET.

Goodwill, Acquired Intangible Assets and Long-Lived Assets

Goodwill is the amount by which the cost of acquired net assets in a business combination exceeds the fair value of the net identifiable assets on the date of purchase and is carried at its historical cost. The Company tests goodwill for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company performs its impairment test of goodwill as of December 31 each year. As of December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~,2019, the fair value of the Company's reporting unit was substantially in excess of the carrying value. The tests did not result in an impairment to goodwill during the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~.2019.

Acquired intangible assets consist of completed technologies, customer relationships, trademarks and trade names, non-compete agreements and acquired license rights. Acquired intangible assets, other than goodwill, are amortized over their estimated useful lives based upon the estimated economic value derived from the related intangible asset. Significant judgment is used in determining fair values of acquired intangibles assets and their estimated useful lives. Acquired intangible assets consist of completed technologies, customer relationships, trademarks and trade names, non-compete agreements and acquired license rights. Acquired intangible assets, other than goodwill, are amortized over their estimated useful lives based upon the estimated economic value derived from the related intangible asset. Significant judgment is used in determining fair values of acquired intangibles assets and their estimated useful lives. Fair value and useful life determinations may be based on, among other factors, estimates of future expected cash flows, royalty cost savings and appropriate discount rates used in calculating present values.

Long-lived assets, including property and equipment, operating lease right-of-use assets and acquired intangible assets, are reviewed for impairment whenever events or changes in circumstances, such as service discontinuance, technological obsolescence, significant decreases in the Company’s market capitalization, facility closures or work-force reductions indicate that the carrying amount of the long-lived asset may not be recoverable. When such events occur, the Company compares the carrying amount of the asset to the undiscounted expected future cash flows related to the asset. If this comparison indicates that an impairment is present, the amount of the impairment is calculated as the difference between the carrying amount and the fair value of the asset.

Contract Liabilities

Contract liabilities primarily represent payments received from customers for which the related performance obligations have not yet been satisfied. These balances consist of the unearned portion of monthly service fees and integration fees and prepayments made by customers for future periods. The current and long-term portions of the Company's contract liabilities are included in deferred revenue in the respective sections of the Company's consolidated balance sheets.

Revenue Recognition

The Company recognizes service revenue in accordance with the authoritative guidance for revenue recognition, including guidance on revenue arrangements with multiple deliverables. Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.

The Company primarily derives revenue from the sale of services to customers executing contracts having terms of one year or longer. Services included in the Company's contracts consist of its core services – the delivery of content, applications and software over the internet – as well as security solutions and professional services. Revenue is recognized upon transfer of control of promised services in an amount that reflects the consideration the Company expects to receive in exchange for those services.

The Company enters into contracts that may include various combinations of these services, which are generally capable of being distinct and accounted for as separate performance obligations. These contracts generally commit the customer to a minimum of monthly, quarterly or annual ~~level~~levels of usage and specify the rate at which the customer must pay for actual usage above the ~~monthly, quarterly or annual~~stated minimum. ~~For~~Based on the typical structure of the Company's contracts, ~~with a~~which are generally for monthly ~~commitment,~~

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recurring services that are essentially the ~~Company recognizes~~same over time and have the ~~monthly minimum as revenue each month, provided that an enforceable contract has been signed by both parties, the service has been delivered~~same pattern of transfer to the customer, most performance obligations represent a promise to deliver a series of distinct services over time.

The Company's contracts with customers sometimes include promises to deliver multiple services to a customer. Determining whether services are distinct performance obligations often requires the ~~fee~~exercise of judgment by management. For example, advanced features that enhance a service and are highly interrelated are generally not considered distinct; rather, they are combined with the service they relate to into one performance obligation. Different determinations related to combining services into performance obligations could result in differences in the timing and amount of revenue recognized in a period.

Generally, the transaction price in a contract is equal to the committed price stated in the contract, less any discounts or rebates. The Company's typical contracts qualify for series accounting, and the pricing terms generally do not require estimation of the transaction price beyond the reporting period. As a result, any incremental fees generated as a result of usage or “bursting” over committed contract levels are recorded in the period to which the services relate. The amount of consideration recognized for usage above contract minimums is limited to the amount the Company expects to be entitled to receive in exchange for providing the services. Once the transaction price has been determined, the Company allocates such price among all performance obligations in the contract on a relative standalone selling price (“SSP”) basis.

Determination of SSP requires the exercise of judgment by management. SSP is based on observable inputs such as the price the Company charges for the service when sold separately or the discounted list price per management’s approved price list. In cases where services are not sold separately or price list rates are not available, a cost-plus-margin approach or adjusted market approach is ~~fixed or determinable~~used to determine SSP.

Most content delivery and ~~collection is reasonably assured. Should a customer’s usage of~~security services represent stand-ready obligations that are satisfied over time as the ~~Company's services exceed~~customer simultaneously receives and consumes the ~~monthly, quarterly or annual minimum,~~benefits provided by the ~~Company recognizes~~Company. Accordingly, revenue for such excess in the period of additional usage. For annual or other non-monthly period revenue commitments, the Company recognizes revenue monthly based upon the customer’s actual usage each month of the commitment period and only recognizes any remaining committed amount for the applicable period in the last month thereof.

~~The Company typically charges its customers an integration fee when the~~those services ~~are first activated. Integration fees are recorded as deferred revenue and~~is recognized ~~as revenue~~over time, generally ratably over the estimated life of the customer arrangement. The Company also derives revenue from services sold as discrete, non-recurring events or based solely on usage. For these services, the Company recognizes revenue once the event or usage has occurred.

When more than one element is contained in a revenue arrangement, the Company determines the fair value for each element in the arrangement based on vendor-specific objective evidence (“VSOE”) for each respective element, including any renewal rates for services contractually offered to the customer. Elements typically included in the Company's multiple element arrangements consist of its core services – the delivery of content, applications and software over the Internet – as well as mobile and security solutions and enterprise professional services. These elements have value to the customer on a stand-alone basis in that they can be sold separately by another vendor. Generally, there is no right of return relative to these services.

The Company typically uses VSOE to determine the fair value of its separate elements. All stand-alone sales of professional services are reviewed to establish the average stand-alone selling price for those services. For the Company's core services, the fair value is the price charged for a single deliverable on a per unit basis when it is sold separately.

For arrangements in which the Company is unable to establish VSOE, third-party evidence ("TPE") of the fair value of each element is determined based upon the price charged when the element is sold separately by another vendor. For arrangements in which the Company is unable to establish VSOE or TPE for each element, the Company uses the best estimate of selling price ("BESP") to determine the fair value of the separate deliverables. The Company estimates BESP based upon a management-approved listing of unit pricing for all solutions and pre-established discount levels for each solution that takes into consideration

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~~volume, geography and industry lines. The Company allocates arrangement consideration across the multiple elements using the relative selling price method.~~

At the inception of a customer contract, the Company makes an assessment as to that customer’s ability to pay for the services provided. The Company bases its assessment on a combination of factors, including the successful completion of a credit check or financial review, its collection experience with the customer and other forms of payment assurance. Upon the completion of these steps, the Company recognizes revenue monthly in accordance with its revenue recognition policy. If the Company subsequently determines that collection from the customer is not reasonably assured, the Company records an allowance for doubtful accounts and bad debt expense for all of that customer’s unpaid invoices and ceases recognizing revenue for continued services provided until cash is received from the customer. Changes in the Company’s estimates and judgments about whether collection is reasonably assured would change the timing of revenue or amount of bad debt expense that the Company recognizes.

The Company also sells its services through reseller channels. Assuming all other revenue recognition criteria are met, the Company recognizes revenue from reseller arrangements based on the reseller’s contracted non-refundable minimum purchase commitments over the term of the ~~contract, plus amounts sold by the reseller~~arrangement due to ~~its customers in excess of the minimum commitments. Amounts attributable to this excess usage are~~consistent monthly traffic commitments that expire each period. Any bursting over given commitments is recognized ~~as revenue~~ in the period in which the ~~service~~traffic was served. For services that involve traffic consumption, revenue is ~~provided.~~recognized in an amount that reflects the level of traffic served to a customer in a given period. For custom arrangements, other methods may be used as a measure of progress towards satisfying the performance obligations.

Some of the Company's contracts are satisfied at a point in time, such as one-time professional services, integration services and most license sales where the primary obligation is delivery of the license at the start of the term. In these cases, revenue is recognized at the point in time of delivery or satisfaction of the performance obligation.

From time to time, the Company enters into contracts to sell its services or license its technology to unrelated enterprises at or about the same time that it enters into contracts to purchase products or services from the same enterprises. Consideration payable to a customer is reviewed as part of the transaction price. If the ~~Company concludes that these contracts were negotiated concurrently,~~payment to the ~~Company records as~~customer does not represent payment for a distinct service, revenue is recognized only up to the net ~~cash received from the vendor, unless the product or service received has a separate identifiable benefit and the fair value~~amount of ~~the vendor’s product or service can be established objectively.~~

consideration after customer payment obligations are considered. The Company may ~~from time to time~~also resell the licenses or services of third parties. ~~The Company records revenue for these transactions on a gross basis when~~If the Company ~~has risk of loss related~~is acting as an agent in an arrangement with a customer to provide third party services, the ~~amounts purchased from~~transaction price reflects only the net amount to which the Company will be entitled, after accounting for payments made to the third party ~~and~~responsible for satisfying the Company adds value to the license or service, such as by providing maintenance or support for such license or service. If these conditions are present, the Company recognizes revenue when all other revenue recognition criteria are satisfied.performance obligation.

Deferred revenue represents amounts billed to customers for which revenue has not been recognized. Deferred revenue primarily consists of the unearned portion of monthly billed service fees, prepayments made by customers for future periods, deferred integration and activation set-up fees and amounts billed under customer arrangements with extended payment terms.

Cost of Revenue

Cost of revenue consists primarily of fees paid to network providers for bandwidth and to third-party network data centers for housing servers, also known as co-location costs. Cost of revenue also includes employee costs for services delivery and network operation, build-out and support of the Company's network; network storage costs; cost of software licenses; depreciation of network equipment used to deliver the Company’s services; amortization of network-related internal-use software; and costs for the production of live events streamed by the Company for customers. The Company enters into contracts for bandwidth with third-party network providers with terms typically ranging from several months to five years. These contracts generally commit the Company to pay minimum monthly fees plus additional fees for bandwidth usage above the committed level. In some circumstances, ~~Internet~~internet service providers (“ISPs”) make rack space available for the ~~Company’s~~Company to locate its servers and provide access to their bandwidth at a discount or no cost. ~~In exchange,~~Although the ~~ISP~~Company does not provide any goods or services to the ISPs or the ISPs’ customers under these arrangements, the ISPs and ~~its~~their customers indirectly benefit by ~~receiving~~accessing content through a local Company server, resulting in better content delivery. The Company ~~does not consider~~records the cost of these vendor relationships to represent the culmination of an earnings process. Accordingly, the Company does not recognize as revenue the value to the ISPs associated with the use of the Company’s servers, nor does the Company recognize as expense the value of the rack space and bandwidth received at ~~discounted~~their negotiated transaction price, which is either at a discount or no cost.

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Research and Development Costs and Capitalized Internal-Use Software

Research and development costs consist primarily of payroll and related personnel costs for the design, development, deployment, testing and enhancement of the Company’s services and network. Costs incurred in the development of the Company’s services are expensed as incurred, except certain internal-use software development costs eligible for capitalization.

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Capitalized costs include external consulting fees, payroll and payroll-related costs and stock-based compensation for employees in the Company’s development and information technology groups who are directly associated with, and who devote time to, the Company’s internal-use software projects. Capitalization begins when the planning stage is complete and the Company commits resources to the software ~~project, and~~project; capitalization continues during the application development stage. Capitalization ceases when the software has been tested and is ready for its intended use. Costs incurred during the planning, training and post-implementation stages of the software development life-cycle are expensed as incurred. The Company amortizes completed internal-use software that is used on its network to cost of revenue over its estimated useful life.

Accounting for Stock-Based Compensation

The Company recognizes compensation costs for all stock-based payment awards made to employees based upon the awards’ grant-date fair value. The stock-based payment awards include stock options, restricted stock units, deferred stock units and employee stock purchases related to the Company’s employee stock purchase plan.

For stock options, the Company has selected the Black-Scholes option-pricing model to determine the fair value of stock option awards. For stock awards with market-based vesting conditions, the Company uses a Monte Carlo simulation to determine the fair value of the award. For stock options, restricted stock units and deferred stock units that contain only a service-based vesting feature, the Company recognizes compensation cost on a straight-line basis over the award's vesting period. For awards with a performance condition-based vesting feature, the Company recognizes compensation cost on a graded-vesting basis over the award's expected vesting period, commencing when achievement of the performance condition is deemed probable. In addition, for awards that vest and become exercisable only upon achievement of specified performance conditions, the Company makes judgments and estimates each quarter about the probability that such performance conditions will be met or achieved. Any changes to those estimates that the Company makes from time to time may have a significant impact on the stock-based compensation expense recorded and could materially impact the Company’s results of operations.

Foreign Currency Translation and Forward Currency Contracts

The assets and liabilities of the Company's subsidiaries are translated at the applicable exchange rate as of the balance sheet date, and revenue and expenses are translated at an average rate over the period. Resulting currency translation adjustments are recorded as a component of accumulated other comprehensive loss, a separate component of stockholders’ equity. Gains and losses on inter-company and other non-functional currency transactions are recorded in ~~Other~~other income (expense), net.

The Company enters into short-term foreign currency forward contracts to offset foreign exchange gains and losses generated by the re-measurement of certain assets and liabilities recorded in non-functional currencies. Changes in the fair value of these derivatives, as well as re-measurement gains and losses, are recognized in current earnings in ~~Other~~other income (expense), net. As of December 31, ~~2017~~2021 and ~~2016,~~2020, the fair value of the forward currency contracts and the underlying ~~net~~ gains and losses for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 were immaterial.

The Company's foreign currency forward contracts may be exposed to credit risk to the extent that its counterparties are unable to meet the terms of the agreements. The Company seeks to minimize counterparty credit (or repayment) risk by entering into transactions only with major financial institutions of investment grade credit rating.

Income Taxes

The Company's provision for income taxes is comprised of a current and a deferred portion. The current income tax provision is calculated as the estimated taxes payable or refundable on tax returns for the current year. The deferred income tax provision is calculated as the estimated future tax effects attributable to temporary differences and carryforwards using expected tax rates in effect in the years during which the differences are expected to reverse or the carryforwards are expected to be realized.

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The Company currently has net deferred tax assets consisting of net operating loss (“NOL”) carryforwards, tax credit carryforwards and deductible temporary differences. Management periodically weighs the positive and negative evidence to determine if it is ~~more likely than not~~more-likely-than-not that some or all of the deferred tax assets will be realized.

The Company has recorded certain tax reserves to address potential exposures involving its income ~~tax and sales and use~~ tax positions. These potential tax liabilities result from the varying application of statutes, rules, regulations and interpretations by different taxing jurisdictions. The Company's estimate of the value of its tax reserves contains assumptions based on past experiences and judgments about the interpretation of statutes, rules and regulations by taxing jurisdictions. It is possible that the costs of the ultimate tax liability or benefit from these matters may be more or less than the amount the Company estimated.

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Uncertainty in income taxes is recognized in the Company's consolidated financial statements using a two-step process. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed more-likely-than-not to be sustained based on technical merit, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement.

In December 2017, the U.S. Tax Cuts and Jobs Act (the "TCJA") was enacted, making significant changes to the Internal Revenue Code. The U.S. Securities and Exchange Commission staff issued guidance for the accounting for certain income tax effects of the TCJA, which allows the Company to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. The Company has recognized the provisional impacts of the TCJA in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact could materially differ from the provisional amounts recorded due to additional analysis, changes in assumptions or interpretations, additional guidance that may be issued and actions the Company may take as a result of the TCJA. The Company expects to complete the analysis within the measurement period and any subsequent adjustment to the provisional amounts will be recognized as a current tax provision or benefit in the quarter of 2018 in which the analysis is completed.

Newly-Adopted Accounting Pronouncements

~~Share-Based Payments~~

In ~~March 2016,~~October 2021, the Financial Accounting Standards Board ("FASB") issued guidance which requires contract assets and contract liabilities from contracts with customers that ~~is intended~~are acquired in a business combination to ~~simplify aspects~~be recognized and measured as if the acquirer had originated the original contract. Previously, contract assets and contract liabilities were measured at fair value. The Company adopted this guidance in the fourth quarter of ~~how share-based payments are accounted for~~2021, which required retrospective adoption to all business combinations completed on or after January 1, 2021, and ~~presented in~~prospectively to all business combinations occurring after adoption. The adoption did not have a material impact to business combinations completed prior to adoption, and did not have a material impact to the Company's financial statements. This guidance requires that entities record all tax effects of share-based payments at settlement or expiration through the income statement. The standard also amends how windfall tax benefits are recognized, the minimum statutory tax withholding requirements and how entities elect to recognize share-based payment forfeitures. In addition, this guidance impacts the presentation of cash flows related to excess tax benefits by no longer requiring separate presentation as a financing activity apart from other operating income tax cash flows.

This guidance was effective for the Company on January 1, 2017. Upon adoption, the Company began recognizing tax benefits related to stock-based compensation in its provision for income taxes rather than as additional paid-in capital. The Company elected to continue estimating forfeitures in determining the amount of compensation cost. The Company was not required to adjust beginning retained earnings as a result of these two items.

In addition, the Company adopted the presentation requirements related to the excess tax benefit in its statements of cash flows on a retrospective basis beginning January 1, 2015. The line item labeled excess tax benefits from stock-based compensation included in both cash flows from operating activities and financing activities was eliminated. This had the impact of increasing net cash provided by operating activities and net cash used in financing activities. Prior periods have been revised as follows (in thousands):

Net Cash Provided by Operating Activities Net Cash Used in Financing Activities
As Reported As Adjusted As Reported As Adjusted
Year ended December 31, 2016 $ 866,298
$ 871,812
$ (354,265 ) $ (359,779 )
Year ended December 31, 2015 764,151
793,452
(267,728 ) (297,029 )

Recent Accounting Pronouncements

~~Revenue Recognition~~

In ~~May 2014,~~August 2020, the FASB issued ~~updated~~ guidance that is expected to reduce complexity and ~~disclosure requirements~~improve comparability of financial reporting associated with accounting for ~~recognizing revenue. The new revenue recognition standard provides a five-step model for recognizing revenue from~~convertible instruments and contracts ~~with customers. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers~~ in an ~~amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.~~entity’s own equity. The ~~new standard could be~~Company adopted ~~using one of two methods: retrospectively to each prior period presented or~~this guidance on January 1, 2022 on a modified retrospective application by recognizing a cumulative-effect adjustment as a component of equity as of the date of adoption. This standard became effective for the Company on January 1, 2018, and the Company has elected to adopt it retrospectively to each prior period presented.basis.

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The updated guidance impacts, or requires the Company to modify, certain judgments and estimates that the Company currently makes as it relates to recognizing revenue. The Company primarily derives revenue from the sales of its services, but in some instances licenses software to some of its customers. Prior to adoption of the updated guidance, the Company did not establish VSOE for the undelivered elements sold with the software. Thus, revenue from license sales was deferred and recognized over the arrangement term. Upon adoption, of the new revenue standard, license revenue will be recognized at a point in time when the license is delivered, provided all other revenue recognition criteria have been met. This will result in accelerating revenue recognition for these types of arrangements. For sales of the Company's services, integration fee revenue that was previously recognized ratably over the estimated life of the customer arrangement will be recognized when integration has been completed, which will have the effect of accelerating revenue recognition from integration fees. In addition, the Company historically established a reserve for cash basis customers if collectability was not reasonably assured and recognized revenue as cash was collected. Upon adoption of the new standard, revenue will be recognized for those customers when collectability becomes probable, transfer of control for all performance obligations has occurred and all other revenue recognition criteria have been achieved, rather than when collectability is reasonably assured.

The Company has quantified the impact that these changes would have had on revenue reported for the years ended December 31, 2017 and 2016, and each of the quarters therein, and determined that they would not have had a material impact on the Company's consolidated financial statements.

The Company is also assessing the impact of capitalizing costs associated with obtaining customer contracts, specifically commission and incentive payments. Historically, these payments have been expensed in the period in which they were incurred. Under the updated guidance, these payments will be deferredconvertible senior notes included on the Company's consolidated balance ~~sheets and amortized over~~sheet will more closely reflect the expected life of the customer arrangement. The Company has quantified the impact that these changes would have had on sales and marketing expenses recorded in the consolidated statements of income for the years ended December 31, 2016 and 2017, and for each of the quarters therein and determined it would not have had a material impact on the consolidated statements of income for such periods. Upon adoption,principal amounts. Initially, the Company ~~expects to record~~separated its convertible senior notes into a liability and equity component. The equity portion will now be eliminated, such that convertible senior notes will increase by $304.7 million, deferred ~~commission~~income tax assets will increase by $74.0 million and ~~incentive asset~~additional paid-in capital will decrease by $375.4 million on the consolidated balance sheet ~~of $58.6 million~~ as of January 1, 2022. The net effect of these adjustments will be recorded as an increase to retained earnings as of January 1, 2022.

With the elimination of the debt discount created by the equity component, amortization of the debt discount will be eliminated, which will have the impact of decreasing interest expense, and therefore increasing net income and earnings per share, from the period of adoption.

Additionally, the new guidance eliminates the use of the treasury stock method for convertible instruments that can be settled in whole or in part with equity, when calculating diluted earnings per share. Instead, it requires application of the if-converted method. Under that method, diluted earnings per share would generally be calculated assuming that all the convertible senior notes were converted solely into shares of common stock at the beginning of the reporting period, unless the result would be antidilutive. The application of the if-converted method would reduce the Company’s reported diluted earnings per share after the adoption date. However, in December ~~31, 2017. The current~~2021, the Company made an irrevocable election to settle the principal portion of the ~~asset~~convertible senior notes with cash. Accordingly, effective from that date forward, the if-converted method will only be ~~included~~impacted by any potential shares to be delivered for the amount in ~~prepaid expenses and other current assets, and the long-term portion will be included in other assets. The full amount~~excess of the ~~adjustment will be included in retained earnings.~~

principal portion. The Company ~~is substantially complete with its implementation efforts as of~~does not expect the ~~filing of these financial statements; however, it is continuing to evaluate the impact that this guidance will have on disclosure requirements related to revenue and revenue-related items.~~

~~Leases~~

In February 2016, the FASB issued guidance that requires companies to present assets and liabilities arising from leases with terms greater than 12 months on the consolidated balance sheets. The updated standard aims to increase transparency and comparability among organizations by requiring lessees to recognize right-of-use assets and lease liabilities on the balance sheet and requiring disclosure of key information about leasing arrangements. This will impact all leases, including leases for real estate and co-location facilities, among other arrangements currently under evaluation. The Company plans to adopt this standard in the first quarter of 2019 and expects to record significant right-of-use assets and lease liabilities on its consolidated balance sheets. The Company has formed a project team to assess the current state of accounting for leases, to understand the gaps between the current state and required future state and to implement the new processes, systems and controls required. The Company expects the adoption of this standard to require changes to ~~its processes, systems and controls over financial reporting.~~the diluted earnings per share guidance to materially impact our results of operations.

~~Credit Losses on Financial Instruments~~

In June 2016, the FASB issued guidance that introduces a new methodology for accounting for credit losses on financial instruments, including available-for-sale debt securities. The guidance establishes a new "expected loss model" that requires entities to estimate current expected credit losses on financial instruments by using all practical and relevant information. Any expected credit losses are to be reflected as allowances rather than reductions in the amortized cost of available-for-sale debt securities. This guidance will be effective for the Company on January 1, 2020. The Company is evaluating the potential impact on its consolidated financial statements of adopting this new accounting guidance.

~~Intra-Entity Asset Transfers~~

In October 2016, the FASB issued guidance that requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This guidance became effective for the Company on January 1, 2018 and is to be applied on a modified retrospective basis through recognizing a cumulative-effect adjustment as a

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~~component of equity as of the date of adoption. Upon adoption, the Company expects to reclassify $11.6 million from other current assets and $27.0 million from other assets to retained earnings.~~

~~Business Combinations~~

In January 2017, the FASB issued guidance that changes the definition of a business to assist entities with evaluating whether transactions should be accounted for as transfers of assets or business combinations. This guidance became effective for the Company on January 1, 2018 and is to be applied prospectively. The adoption of this new accounting guidance will change the manner in which the Company evaluates whether a transaction is a transfer of assets or a business combination. This may result in a transaction being recorded as a transfer of assets, whereas previously the Company may have concluded it was a business combination.

3. Fair Value Measurements

The following is a summary of available-for-sale marketable securities held as of December 31, ~~2017~~2021 and ~~2016~~2020 (in thousands):


																									Gross Unrealized								Aggregate Fair Value				Classification on Balance Sheet
			Gross Unrealized					Aggregate Fair Value				Classification on Balance Sheet									Amortized Cost														Short-Term Marketable Securities					Long-Term Marketable Securities
As of December 31, 2021																As of December 31, 2021								Gains				Losses				Aggregate Fair Value
	Amortized Cost										Short-Term Marketable Securities				Long-Term Marketable Securities
As of December 31, 2017			Gains		Losses									Aggregate Fair Value
Commercial paper	$	6,951	$	—	$	(9	)			$	6,942	$	6,942					$	—		Commercial paper		$	25,056			$	—			$				(24)				$	25,032				$	25,032		$	—
Corporate bonds	736,902		2		(3,829		)		733,075		289,378						443,697			Corporate bonds		1,268,991				1,191				(4,275)						1,265,907					459,012					806,895

U.S. government agency obligations	220,014		—		(1,764		)	218,250				102,234				116,016			U.S. government agency obligations		316,728				3				(1,281)				315,450				56,530					258,920
	$	963,867	$	2	$	(5,602	)	$	958,267			$	398,554			$	559,713				$	1,610,775			$	1,194			$	(5,580)			$	1,606,389			$	540,574				$	1,065,815

As of December 31, 2016
As of December 31, 2020																			As of December 31, 2020

Commercial paper	$	40,965	$	—	$	(45	)	$	40,920			$	40,920			$	—		Commercial paper		$	46,931			$	13			$	(8)			$	46,936			$	46,936				$	—
Corporate bonds	984,650		123		(3,697		)	981,076				418,495				562,581			Corporate bonds		1,628,462				9,482				(262)				1,637,682				607,403					1,030,279
Municipal securities																			Municipal securities		3,495				—				(6)				3,489				—					3,489
U.S. government agency obligations	267,473		35		(1,366		)	266,142				53,157				212,985			U.S. government agency obligations		435,653				329				(63)				435,919				89,951					345,968
	$	1,293,088	$	158	$	(5,108	)	$	1,288,138			$	512,572			$	775,566				$	2,114,541			$	9,824			$	(339)			$	2,124,026			$	744,290				$	1,379,736

The Company offers certain eligible employees the ability to participate in a non-qualified deferred compensation

plan. The mutual funds held by the Company that are associated with this plan are classified as restricted trading securities.

These securities are not included in the available-for-sale securities table above but are included in marketable securities in the

consolidated balance sheets.

Unrealized gains and unrealized temporary losses on investments classified as available-for-sale are included within accumulated other comprehensive loss in the consolidated balance sheets. Upon realization, those amounts are reclassified from accumulated other comprehensive loss to interest income in the consolidated statements of income. As of December 31, ~~2017,~~2021, the Company held for investment corporate bonds with a fair value of ~~$543.6~~$38.2 million, which are classified as available-for-sale marketable securities and have been in a continuous unrealized loss position for more than 12 months. The unrealized losses ~~of $3.9 million~~ related to these corporate bonds were $0.2 million and are included in accumulated other comprehensive ~~income~~loss as of December 31, ~~2017.~~2021. The unrealized losses are attributable to changes in interest rates. Based on the evaluation of available evidence, the Company does not believe any unrealized losses represent other than temporary impairments.

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The following table details the fair value measurements within the fair value hierarchy of the Company’s financial assets ~~and liabilities~~ as of December 31, ~~2017~~2021 and ~~2016~~2020 (in thousands):


												Total Fair Value		Fair Value Measurements at Reporting Date Using
	Total Fair Value			Fair Value Measurements at Reporting Date Using										Level 1		Level 2
				Level 1		Level 2		Level 3
As of December 31, 2017
As of December 31, 2021											As of December 31, 2021
Cash Equivalents and Marketable Securities:											Cash Equivalents and Marketable Securities:
Money market funds	$	22,649		$	22,649	$	—	$	—		Money market funds	$	109,313	$	109,313	$	—

Commercial paper	10,928			—		10,928		—			Commercial paper	39,031		—		39,031
Corporate bonds	733,075			—		733,075		—			Corporate bonds	1,265,907		—		1,265,907

U.S. government agency obligations	218,248			—		218,248		—			U.S. government agency obligations	315,450		—		315,450
Mutual funds	7,879			7,879		—		—			Mutual funds	23,129		23,129		—
	$	992,779		$	30,528	$	962,251	$	—			$	1,752,830	$	132,442	$	1,620,388

Liabilities:
Contingent consideration obligation related to completed acquisitions	$	(8,631	)	$	—	$	—	$	(8,631	)

As of December 31, 2016
As of December 31, 2020											As of December 31, 2020
Cash Equivalents and Marketable Securities:											Cash Equivalents and Marketable Securities:
Money market funds	$	8,726		$	8,726	$	—	$	—		Money market funds	$	74,417	$	74,417	$	—

Commercial paper	40,920			—		40,920		—			Commercial paper	75,785		—		75,785
Corporate bonds	981,076			—		981,076		—			Corporate bonds	1,637,682		—		1,637,682
Municipal securities											Municipal securities	3,489		—		3,489
U.S. government agency obligations	266,142			—		266,142		—			U.S. government agency obligations	435,919		—		435,919
Mutual funds	4,022			4,022		—		—			Mutual funds	19,932		19,932		—
	$	1,300,886		$	12,748	$	1,288,138	$	—			$	2,247,224	$	94,349	$	2,152,875

Liabilities:
Contingent consideration obligation related to completed acquisitions	$	(7,100	)	$	—	$	—	$	(7,100	)

As of December 31, ~~2017~~2021 and ~~2016,~~2020, the Company grouped money market ~~funds~~ and mutual funds using a Level 1 valuation because market prices for such investments are readily available in active markets. As of December 31, ~~2017~~2021 and ~~2016,~~2020, the Company grouped commercial paper, U.S. government agency obligations, ~~and~~ corporate bonds and municipal securities using a Level 2 valuation because quoted prices for similar assets in active markets (or identical assets in an inactive market) are available. The Company did not have any transfers of assets or liabilities between Level 1 ~~and~~or Level 2 of the fair value measurement hierarchy during the years ended December 31, ~~2017~~2021 and ~~2016~~.2020.

When developing fair value estimates, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. When available, the Company uses quoted market prices to measure fair value. The valuation technique used to measure fair value for the Company's Level 1 and Level 2 assets is a market approach, using prices and other relevant information generated by market transactions involving identical or comparable assets. If market prices are not available, the fair value measurement is based on models that use primarily market-based parameters including yield curves, volatilities, credit ratings and currency rates. In certain cases where market rate assumptions are not available, the Company is required to make judgments about the assumptions market participants would use to estimate the fair value of a financial instrument.

The valuation technique used to measure the fair value of the Company's Level 3 liabilities, which consist of contingent consideration related to the acquisitions of Soha Systems, Inc. ("Soha") and Cyberfend, Inc. ("Cyberfend") in 2016 (Note 8), was primarily an income-based approach. The significant unobservable input used in the fair value measurement of the contingent consideration is the likelihood of achieving development milestones to integrate the acquired technology into the Company's technology as well as achieving certain post-closing financial results.

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Contractual maturities of the Company’s available-for-sale marketable securities held as of December 31, ~~2017~~2021 and ~~2016~~2020 were as follows (in thousands):


	December 31, 2021		December 31, 2020
Due in 1 year or less	$	540,574	$	744,290
Due after 1 year through 5 years	1,065,815		1,379,736
	$	1,606,389	$	2,124,026

December 31, 2017 December 31, 2016
Due in 1 year or less $ 398,554
$ 512,572
Due after 1 year through 5 years 559,713
775,566
$ 958,267
$ 1,288,138

~~The following table reflects the activity for the Company’s major classes~~Table of ~~liabilities measured at fair value using Level 3 inputs for the years ended December 31, 2017 and 2016 (in thousands):~~Contents

Other Liabilities:
Contingent Consideration Obligation
Balance, January 1, 2016 $ —
Contingent consideration obligation related to Soha acquisition (1,600 )
Contingent consideration obligation related to Cyberfend acquisition (5,500 )
Balance, December 31, 2016 $ (7,100 )
Fair value adjustment to contingent consideration included in general and administrative expense
(2,781 )
Cash paid upon achievement of milestone 1,250
Balance, December 31, 2017 $ (8,631 )

4. Accounts Receivable

Net accounts receivable consisted of the following as of December 31, ~~2017~~2021 and ~~2016~~2020 (in thousands):


	December 31, 2021		December 31, 2020
Trade accounts receivable	$	501,959	$	473,474
Unbilled accounts receivable	175,364		188,400
Gross accounts receivable	677,323		661,874
Allowance for current expected credit losses and other reserves	(1,397)		(1,822)
Accounts receivable, net	$	675,926	$	660,052

December 31, 2017 December 31, 2016
Trade accounts receivable $ 319,996
$ 260,976
Unbilled accounts receivable 140,410
113,765
Gross accounts receivable 460,406
374,741
Allowance for doubtful accounts (1,043 ) (829 )
Reserve for cash-basis customers (236 ) (5,316 )
Total accounts receivable reserves (1,279 ) (6,145 )
Accounts receivable, net $ 459,127
$ 368,596

A summary of activity in the accounts receivable allowance for current expected credit losses and other reserves for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015,~~2019 is as follows (in thousands):


	2021		2020		2019
Beginning balance	$	1,822	$	1,880	$	1,534
Charges to income from operations	4,576		12,347		5,116
Collections from customers previously reserved and other	(5,001)		(12,405)		(4,770)
Ending balance	$	1,397	$	1,822	$	1,880

2017 2016 2015
Beginning balance $ 6,145
$ 7,364
$ 9,023
Charges to income from operations 5,809
49,677
37,870
Collections from cash basis customers and write-offs (10,675 ) (50,896 ) (39,529 )
Ending balance $ 1,279
$ 6,145
$ 7,364

Charges to income from operations ~~represent~~primarily represents charges to bad debt expense for increases in the allowance for doubtful accounts and reductions to revenue for increases in reserves for cash basis customers. The decrease in the reserve activity during 2017 is primarily attributable to two customers that were removed from cash-basis revenue recognition due to a strong, consistent history of payment.current expected credit losses.

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5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following as of December 31, ~~2017~~2021 and ~~2016~~2020 (in thousands):


	December 31, 2021		December 31, 2020
Prepaid income taxes	$	32,021	$	30,682
Prepaid sales and other taxes	28,300		24,034
Prepaid equipment and software maintenance	10,661		15,526
Deferred commissions	43,562		54,516
Other prepaid expenses	35,109		26,187
Other current assets	16,660		20,461
Total	$	166,313	$	171,406

Incremental Costs to Obtain a Contract with a Customer

The following table summarizes the deferred costs associated with obtaining customer contracts, specifically commission and incentive payments, as of December 31, 2021 and 2020 (in thousands):


	December 31, 2021		December 31, 2020
Deferred costs included in prepaid and other current assets	$	43,562	$	54,516
Deferred costs included in other assets	30,436		23,200
Total deferred costs	$	73,998	$	77,716

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December 31, 2017 December 31, 2016
Prepaid income taxes $ 30,314
$ 25,161
Prepaid sales and other taxes 22,973
18,877
Prepaid equipment and software maintenance 26,354
15,805
Other prepaid expenses 28,866
24,727
Other current assets 29,302
19,733
Total $ 137,809
$ 104,303
The following table summarizes additional information related to incremental costs to obtain a contract with a customer for the years ended December 31, 2021, 2020 and 2019 (in thousands):


	2021		2020		2019
Amortization expense related to deferred costs	$	58,433	$	61,682	$	44,266
Incremental costs capitalized	56,509		67,058		54,514

Amortization expense related to deferred costs is primarily included in sales and marketing expense in the consolidated statements of income.

6. Property and Equipment

Property and equipment consisted of the following as of December 31, ~~2017~~2021 and ~~2016~~2020 (in thousands, except years):


	December 31, 2021		December 31, 2020		Estimated Useful Life (in years)
Computer and networking equipment	$	1,981,775	$	1,847,717	3-7
Purchased software	89,347		95,662		3-10
Furniture and fixtures	71,381		71,119		1-7
Office equipment	42,616		40,235		3-5
Leasehold improvements	227,358		230,423		1-15
Internal-use software	1,382,099		1,234,934		2-7
Property and equipment, gross	3,794,576		3,520,090
Accumulated depreciation and amortization	(2,260,247)		(2,041,818)
Property and equipment, net	$	1,534,329	$	1,478,272

December 31, 2017 December 31, 2016 Estimated Useful Life
Computer and networking equipment $ 1,292,587
$ 1,170,471
3-7
Purchased software 61,276
51,727
3-10
Furniture and fixtures 48,521
41,968
5
Office equipment 26,949
24,497
3-5
Leasehold improvements 152,487
139,991
1-16
Internal-use software 765,162
656,053
2-7
Property and equipment, gross 2,346,982
2,084,707

Accumulated depreciation and amortization (1,484,447 ) (1,283,690 )
Property and equipment, net $ 862,535
$ 801,017

Depreciation and amortization expense on property and equipment and capitalized internal-use software for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 was ~~$341.4~~$502.6 million,, ~~$307.7~~ $436.3 million and ~~$272.5~~$402.1 million,, respectively. During the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~,2019, the Company capitalized ~~$28.9~~$35.0 million, ~~$23.1~~$38.0 million and ~~$17.9~~$35.9 million,, respectively, of stock-based compensation related to employees who developed and enhanced internal-use software applications.

During the years ended December 31, ~~2017~~2021 and ~~2016~~,2020, the Company wrote off ~~$174.6~~$283.4 million and ~~$93.4~~$279.9 million,, respectively, of property and equipment, gross, along with the associated accumulated depreciation and amortization. The write-offs were primarily related to computer and networking equipment and internal-use software no longer in use. These assets had been substantially depreciated and amortized. In addition, ~~during the year ended December 31, 2017,~~ the Company wrote off ~~$36.2~~$3.4 million and $0.8 million, primarily of internal-use software as a result of certain restructuring ~~efforts. These assets had a net book value of $32.0 million~~efforts during the years ended December 31, 2021 and ~~are included in restructuring charges in the consolidated statements of income.~~December 31, 2020, respectively.

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7. Goodwill and Acquired Intangible Assets

~~The changes in the carrying amount of goodwill for the years ended~~ ~~December 31, 2017 and 2016~~ ~~were as follows (in thousands):~~

2017 2016
Beginning balance $ 1,228,503
$ 1,150,244
Acquisition of Concord Systems, Inc. —
1,079
Acquisition of Soha Systems, Inc. —
43,515
Acquisition of Cyberfend, Inc. —
38,754
Acquisition of Soasta, Inc. 121,668
—
Acquisition of Nominum, Inc. 133,754
—
Measurement period adjustments 4,217
—
Foreign currency translation 10,546
(5,089 )
Ending balance $ 1,498,688
$ 1,228,503

Acquired intangible assets that are subject to amortization consisted of the following as of December 31, ~~2017~~2021 and ~~2016~~2020 (in thousands):


	December 31, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Completed technologies	$	257,857	$	(128,715)	$	129,142	$	172,346	$	(111,435)	$	60,911
Customer-related intangible assets	398,182		(216,192)		181,990		358,032		(186,733)		171,299
Non-compete agreements	258		(107)		151		373		(77)		296
Trademarks and trade names	8,039		(6,097)		1,942		7,658		(5,440)		2,218
Acquired license rights	490		(490)		—		490		(490)		—
Total	$	664,826	$	(351,601)	$	313,225	$	538,899	$	(304,175)	$	234,724

December 31, 2017 December 31, 2016
Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount
Completed technologies $ 145,091
$ (65,283 ) $ 79,808
$ 119,091
$ (50,823 ) $ 68,268
Customer-related intangible assets 245,310
(128,835 ) 116,475
192,810
(114,209 ) 78,601
Non-compete agreements 4,710
(3,975 ) 735
5,030
(3,775 ) 1,255
Trademarks and trade names 7,200
(2,959 ) 4,241
3,700
(2,361 ) 1,339
Acquired license rights 490
(490 ) —
490
(490 ) —
Total $ 402,801
$ (201,542 ) $ 201,259
$ 321,121
$ (171,658 ) $ 149,463

Aggregate expense related to amortization of acquired intangible assets for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 was ~~$30.9~~$48.0 million,~~, $26.6~~ $42.0 million and $~~27.1~~$38.6 million,, respectively. Based on the Company's acquired intangible assets as of December 31, ~~2017~~,2021, aggregate expense related to amortization of acquired intangible assets is expected to be ~~approximately~~ ~~$33.3~~$48.1 million,, ~~$36.5~~ $43.5 million,, ~~$33.8~~ $38.9 million,~~, $27.9~~ $35.8 million and ~~$22.4~~$31.0 million for the years ending December 31, ~~2018, 2019, 2020,~~2022, 2023, 2024, 2025 and 2026, respectively.

The changes in the carrying amount of goodwill for the years ended December 31, 2021 and ~~2022, respectively.~~2020 were as follows (in thousands):


	2021		2020
Beginning balance	$	1,674,371	$	1,600,265

Acquisition of Guardicore Ltd.	479,110		—
Acquisition of Inverse, Inc.	10,741		—
Acquisition of Asavie Technologies Limited	—		70,200
Measurement period adjustments related to acquisitions completed in prior years	(267)		(1,056)
Foreign currency translation	(7,701)		4,962
Ending balance	$	2,156,254	$	1,674,371

8. ~~Business~~ Acquisitions

Acquisition-related costs were ~~$5.5~~$13.3 million, ~~$1.7~~$5.6 million and ~~$1.8~~$1.9 million during the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015,~~2019, respectively, and are included in general and administrative expense in the consolidated statements of income. Pro forma results of operations for the acquisitions completed in the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 have not been presented because the effects of the acquisitions, individually and in the aggregate, are not material to the Company's consolidated financial results. Revenue and earnings attributable to acquired operations since the dates of their acquisitions are included in the Company's consolidated statements of income and not presented separately because they are not material.

~~2017 Acquisitions~~Linode

~~Nominum~~

~~On November 27, 2017,~~In February 2022, the Company ~~acquired Nominum, Inc.~~announced its intention to acquire Linode Limited Liability Company ("~~Nominum"~~Linode"), afor approximately $900.0 million, net of cash acquired and subject to post-closing adjustments. Linode is an infrastructure-as-a-service platform provider ~~of domain name system ("DNS") and enterprise security solutions,~~that allows for ~~$180.3 million in cash. The allocation of the purchase price has not been finalized as of the filing of these financial statements.~~developer-friendly cloud computing capabilities. The acquisition is intended to ~~add complementary capabilities~~enhance the Company’s edge computing services by creating a unique cloud platform to build, run and secure applications from the cloud to the ~~Company's portfolio of security offerings while expanding the Company’s distribution~~edge. The acquisition is expected to ~~carriers that serve enterprise customers.~~close in March 2022.

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2021 Acquisitions

Guardicore

In October 2021, the Company acquired Guardicore Ltd. ("Guardicore"), for $610.4 million in cash. Guardicore's micro-segmentation solution is designed to limit user access to only those applications that are authorized to communicate with each other, thereby limiting the spread of malware and protecting the flow of enterprise data across the network. The acquisition is intended to enhance the Company's security portfolio with the addition of Guardicore's micro-segmentation technology. As of December 31, 2021, the purchase price allocation was substantially complete except for the finalization of certain income tax matters and net working capital.

The following table presents the preliminary allocation of the purchase price for ~~Nominum~~Guardicore (in thousands):


Total purchase consideration	$	610,439

Allocation of the purchase consideration:
Cash	$	27,252
Accounts receivable	10,179
Prepaid expenses and other current assets	1,334
Property and equipment	1,221
Operating lease right-of-use assets	4,609
Identifiable intangible assets	123,600
Goodwill	479,110
Deferred income tax assets	7,124
Other assets	890
Total assets acquired	655,319
Accounts payable	(1,523)
Accrued liabilities	(7,218)
Deferred revenue	(34,548)
Operating lease liabilities	(1,591)


Total liabilities assumed	(44,880)
Net assets acquired	$	610,439

The value of the goodwill can be attributed to a number of business factors, including a trained technical and sales workforce and cost synergies expected to be realized. The Company expects that most of the goodwill related to the acquisition of Guardicore will be deductible for tax purposes.

The following were the identified intangible assets acquired and their respective weighted average useful lives (in thousands, except years):


	Gross Carrying Amount		Weighted Average Useful Life (in years)
Completed technologies	$	79,000	15.0
Customer-related intangible assets	44,200		14.0
Trademarks	400		1.9

Total	$	123,600

The Company applied the relief-from-royalty method to estimate the fair values of the completed technologies and trademarks, and the excess earnings method to estimate the fair values of the customer-related acquired intangible assets. The Company applied significant judgment in estimating the fair values of the acquired intangible assets, which involved significant estimates and assumptions with respect to forecasted revenue growth rates and discount rates. The total weighted average amortization period for the intangible assets acquired from Guardicore is 14.6 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized.

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Total purchase consideration $ 180,327

Allocation of the purchase consideration:
Cash $ 8,455
Accounts receivable 9,845
Prepaids and other current assets 1,481
Identifiable intangible assets 32,800
Goodwill 133,754
Fixed assets 2,169
Deferred tax assets 11,398
Other assets 19
Total assets acquired 199,921
Accounts payable (1,460 )
Accrued liabilities (3,306 )
Deferred revenue (14,828 )
Total liabilities assumed (19,594 )
Net assets acquired $ 180,327
Inverse

In February 2021, the Company acquired Inverse, Inc. ("Inverse"), for $17.1 million. Inverse provides a data repository and algorithms capable of identifying device types accessing the internet. The acquisition enhances the Company's enterprise security capabilities. The Company allocated $10.7 million of the cost of the acquisition to goodwill and $7.6 million to a technology-related identifiable intangible asset with an average useful life of 14.0 years. The acquired goodwill and intangible assets are partially offset by acquired negative working capital balances. The value of the goodwill is primarily attributable to synergies related to the integration of Inverse technology onto the Company's platform as well as a trained technical workforce. The total amount of goodwill related to the acquisition of Inverse expected to be deductible for tax purposes is $10.7 million. The Company finalized its allocation of purchase price in the fourth quarter of 2021, which did not result in a material change to the preliminary allocation.

2020 Acquisitions

Asavie

In October 2020, the Company acquired all outstanding stock of Asavie Technologies Limited ("Asavie"), a privately-funded company headquartered in Dublin, Ireland, for $155.0 million in cash. Asavie operates a global platform for managing the security, performance and access policies for mobile and internet-connected devices; its solutions will become part of Akamai’s security and personalization services product line. The Company finalized its allocation of the purchase price in the fourth quarter of 2021.

The following table presents the allocation of the purchase price for Asavie (in thousands):


Total purchase consideration	$	154,952

Allocation of the purchase consideration:
Cash	$	26,847
Accounts receivable	14,002
Prepaid expenses and other current assets	995
Property and equipment	2,274
Operating lease right-of-use assets	6,104
Identifiable intangible assets	58,070
Goodwill	70,228
Other assets	395
Total assets acquired	178,915
Accounts payable	(951)
Accrued liabilities	(5,926)
Deferred revenue	(3,136)
Operating lease liabilities	(6,104)
Deferred income tax liabilities	(6,965)
Other liabilities	(881)
Total liabilities assumed	(23,963)
Net assets acquired	$	154,952

The value of the goodwill can be attributed to a number of business factors, including a trained technical and sales workforce and cost synergies expected to be realized. None of goodwill related to the acquisition of Asavie is expected to be deductible for tax purposes.

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The following were the identified intangible assets acquired and their respective weighted average useful lives (in thousands, except years):


	Gross Carrying Amount		Weighted Average Useful Life (in years)
Completed technologies	$	17,300	10.1
Customer-related intangible assets	40,400		11.1
Trademarks	100		0.9
Non-compete agreements	270		2.9
Total	$	58,070

The total weighted average amortization period for the intangible assets acquired from Asavie is 10.8 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized.

Instart Logic

In February 2020, the Company acquired certain assets from Instart Logic, Inc., a provider of cloud solutions for improving web and mobile application performance, for $36.4 million in cash. The purchase price was primarily allocated to a customer-related intangible asset that will be amortized over 17.0 years in a pattern that matches expense with expected economic benefits.

2019 Acquisitions

ChameleonX

In November 2019, the Company acquired ChameleonX, Ltd. ("ChameleonX"), an Israel-based company with a solution designed to detect when a website contains or links to malware that causes end user data to be compromised, for $11.9 million in cash. The acquisition is expected to further strengthen the Company's security solutions portfolio. The Company allocated $7.1 million of the cost of the acquisition to goodwill and $6.1 million to a technology-related identifiable intangible asset with an average useful life of 7.1 years. The value of the goodwill is primarily attributable to synergies related to the integration of ChameleonX technology onto the Company's platform as well as a trained technical workforce. The total amount of goodwill related to the acquisition of ChameleonX expected to be deductible for tax purposes is $7.3 million. The Company finalized its allocation of purchase price in the fourth quarter of 2020, which did not result in a material change to the preliminary allocation.

Exceda

On November 1, 2019, in a series of stock and asset purchase transactions, the Company acquired the operations of a group of companies known as Exceda, a vendor of content delivery network and web security services and, collectively, the Company's largest channel partner in Latin America, for $32.7 million in cash. The acquisition is expected to enable the Company to expand its Latin America business more quickly, better support existing and new partners and improve experiences for more customers. The Company allocated $14.7 million of the cost of the acquisition to goodwill and $16.5 million to identifiable intangible assets, primarily customer-related. The total weighted average useful life of the intangible assets acquired from Exceda is 8.1 years. The value of the goodwill is primarily attributable to synergies related to the scale of the combined teams as well as Exceda's trained technical workforce. The total amount of goodwill related to the acquisition of Exceda expected to be deductible for tax purposes is $14.7 million.

The Company acquired various obligations as part of the acquisition for which it is indemnified. The total obligations recorded, with corresponding indemnification asset, totaled $20.0 million. The Company finalized its allocation of purchase price in the fourth quarter of 2020, which did not result in a material change to the preliminary allocation.

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Janrain

In January 2019, the Company acquired Janrain, Inc. ("Janrain"), a provider of customer identity and access management solutions, for $123.6 million in cash. The Company incorporated the Janrain technology into its Intelligent Edge Platform. The Company finalized its allocation of purchase price in the fourth quarter of 2019.

The following table presents the final allocation of the purchase price for Janrain (in thousands):


Total purchase consideration	$	123,632

Allocation of the purchase consideration:
Cash	$	2,223
Accounts receivable	7,318
Prepaid expenses and other current assets	838
Identifiable intangible assets	26,930
Goodwill	92,188
Deferred tax asset	12,622
Other assets	87
Total assets acquired	142,206
Accounts payable	(1,642)
Accrued liabilities	(2,596)
Deferred revenue	(14,336)

Total liabilities assumed	(18,574)
Net assets acquired	$	123,632

The value of the goodwill can be attributed to a number of business factors, including a trained technical and sales workforce and cost synergies expected to be realized. The total amount of goodwill related to the acquisition of ~~Nominum~~Janrain expected to be deductible for tax purposes is ~~$44.2~~$45.7 million.

The following were the identified intangible assets acquired and their respective weighted average useful lives (in thousands, except years):


	Gross Carrying Amount		Weighted Average Useful Life (in years)
Completed technologies	$	9,000	7.9
Customer-related intangible assets	17,700		13.9
Trademarks	200		1.9
Non-compete agreements	30		1.9
Total	$	26,930

Gross Carrying Amount Weighted Average Useful Life
Completed technologies $ 7,200
2.2
Customer-related intangible assets 24,300
6.5
Trademarks 1,100
3.7
Non-compete agreements 200
1.5
Total $ 32,800

The total weighted average amortization period for the intangible assets acquired from ~~Nominum~~Janrain is ~~5.4~~11.8 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized.

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~~Soasta~~

On April 6, 2017, the Company acquired Soasta, Inc. ("Soasta"), a leader in digital performance management, for $199.3 million in cash. The allocation of the purchase price has not been finalized as of the filing of these financial statements. The acquisition is expected to allow the Company to offer solutions designed to provide greater visibility into the business impact of customers' website and application optimization strategies.

~~The following table presents the preliminary allocation of the purchase price for Soasta (in thousands):~~

Total purchase consideration $ 199,280

Allocation of the purchase consideration:
Cash $ 1,935
Accounts receivable 4,108
Prepaids and other current assets 1,143
Identifiable intangible assets 49,900
Goodwill 125,584
Deferred tax assets 31,206
Total assets acquired 213,876
Accounts payable (1,119 )
Accrued liabilities (3,915 )
Deferred revenue (9,562 )
Total liabilities assumed (14,596 )
Net assets acquired $ 199,280

The value of the goodwill can be attributed to a number of business factors, including a trained technical and sales workforce and cost synergies expected to be realized. The total amount of goodwill related to the acquisition of Soasta expected to be deductible for tax purposes is $35.6 million.

~~The following were the identified intangible assets acquired and their respective weighted average useful lives (in thousands, except years):~~

Gross Carrying Amount Weighted Average Useful Life
Completed technologies $ 18,800
4.1
Customer-related intangible assets 28,200
4.6
Trademarks 2,400
4.9
Non-compete agreements 500
1.9
Total $ 49,900

The total weighted average amortization period for the intangible assets acquired from Soasta is 4.4 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized.

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~~2016 Acquisitions~~

~~Concord Systems~~

On September 23, 2016, the Company acquired Concord Systems, Inc. ("Concord"), a provider of technology for processing data at scale, for $3.0 million in cash. The acquisition was intended to provide the Company with technology to complement existing platform data processing capabilities. The Company allocated $1.1 million of the cost of the acquisition to goodwill and $2.8 million to an identifiable intangible asset with a useful life of 7.0 years. The value of the goodwill is primarily attributable to synergies related to the integration of Concord technology onto the Company's platform as well as a trained technical workforce. An insignificant portion of the goodwill related to the acquisition of Concord is expected to be deducted for tax purposes.

~~Soha~~

On October 3, 2016, the Company acquired Soha, a provider of technology designed to facilitate secure access to enterprise applications, for $55.0 million in initial consideration and up to an additional $5.0 million for the achievement of post-closing milestones. The acquisition was intended to complement the Company's strategy of securing, protecting and accelerating enterprise applications and services in the cloud. The Company allocated $44.1 million of the cost of the acquisition to goodwill and $10.7 million to identifiable intangible assets. The total weighted average useful life of the intangible assets acquired from Soha is 4.7 years. The value of the goodwill is primarily attributable to synergies related to the integration of Soha technology onto the Company's platform as well as a trained technical workforce. The total amount of goodwill related to the acquisition of Soha expected to be deducted for tax purposes is $12.0 million.

~~Cyberfend~~

On December 15, 2016, the Company acquired Cyberfend, an innovator in bot and automation detection solutions for web and mobile environments, for $37.5 million in initial consideration and up to an additional $10.5 million upon the achievement of post-closing milestones. The acquisition was intended to further strengthen the Company's existing bot management and mitigation services. The Company allocated $38.5 million of the cost of the acquisition to goodwill and $6.5 million to acquired intangible assets. The total weighted average useful life of the intangible assets acquired from Cyberfend is 3.6 years. The value of the goodwill from the acquisition can be attributed to a number of business factors including a trained technical workforce and cost synergies expected to be realized. The total amount of goodwill related to the acquisition of Cyberfend expected to be deducted for tax purposes is $11.0 million.

~~2015 Acquisitions~~

~~Xerocole~~

On February 27, 2015, the Company acquired Xerocole, Inc. ("Xerocole"), a provider of recursive DNS functionality, for $16.6 million in cash. The Company acquired Xerocole with a goal of expanding its existing authoritative DNS products. The Company allocated $12.9 million of the cost of the acquisition to goodwill and $4.9 million to acquired intangible assets. The total weighted average useful life of the intangible assets acquired from Xerocole is 8.8 years. The value of the goodwill from the acquisition can be attributed to a number of business factors including a trained technical workforce and cost synergies expected to be realized. The total amount of goodwill expected to be deducted for tax purposes is $2.7 million.

~~Table of Contents~~

~~Octoshape~~

On April 6, 2015, the Company acquired all of the outstanding capital stock of Codemate A/S and its wholly-owned subsidiary Octoshape ApS (together, "Octoshape") in exchange for $107.0 million in cash. Octoshape was a cloud service provider focused on delivering broadcast, enterprise and carrier solutions. The goal of acquiring Octoshape was to make available for the Company's customers additional delivery and optimization technologies for video streams of over-the-top (often referred to as OTT) content and to enable the Company to more fully support Internet Protocol television solutions. The following table presents the final allocation of the purchase price for Octoshape (in thousands):

Total purchase consideration $ 107,047

Allocation of the purchase consideration:
Cash $ 664
Accounts receivable 1,976
Other current assets 393
Identifiable intangible assets 41,950
Goodwill 69,445
Deferred tax assets 5,230
Total assets acquired 119,658
Other current liabilities (1,983 )
Current deferred revenue (770 )
Deferred tax liabilities (9,858 )
Total liabilities assumed (12,611 )
Net assets acquired $ 107,047

The value of the goodwill can be attributed to a number of business factors, including a trained technical and sales workforce and cost synergies expected to be realized. The total amount of goodwill related to the acquisition of Octoshape expected to be deducted for tax purposes is $69.4 million.

~~The following were the identified intangible assets acquired and their respective weighted average useful lives (in thousands, except years):~~

Gross Carrying Amount Weighted Average Useful Life
Completed technologies $ 25,310
9.8
Customer-related intangible assets 16,560
11.8
Non-compete agreements 80
2.0
Total $ 41,950

The total weighted average amortization period for the intangible assets acquired from Octoshape is 10.6 years. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized.

~~Bloxx~~

On October 30, 2015, the Company acquired Bloxx Limited ("Bloxx"), a provider of Secure Web Gateway technology, for $18.7 million in cash. The acquisition was intended to provide the Company with technology to complement its cloud security strategy for protecting businesses against Internet vulnerabilities. The Company allocated $17.7 million of the cost of the acquisition to goodwill and $3.9 million to the acquired intangible assets. The total weighted average useful life of the intangible assets acquired from Bloxx is 7.2 years. The value of the goodwill from the acquisition can be attributed to a number of business factors including a trained technical workforce and cost synergies expected to be realized. The total amount of goodwill related to the acquisition of Bloxx expected to be deducted for tax purposes is $17.7 million.

~~Table of Contents~~

9. Accrued Expenses ~~and Other Liabilities~~

Accrued expenses consisted of the following as of December 31, ~~2017~~2021 and ~~2016~~2020 (in thousands):


	December 31, 2021		December 31, 2020
Payroll and other related benefits	$	222,535	$	218,588
Income tax payable	72,946		50,812
Bandwidth and co-location	72,904		67,170
Property, use and other taxes	33,883		35,390
Professional service fees	2,929		2,245
Other accrued expenses	6,393		6,263
Total	$	411,590	$	380,468

December 31, 2017 December 31, 2016
Payroll and other related benefits $ 150,784
$ 110,822
Bandwidth and co-location 72,782
61,084
Property, use and other taxes 47,584
52,858
Professional service fees 4,225
4,277
Other accrued expenses 8,368
9,736
Total $ 283,743
$ 238,777

~~Other liabilities consisted of the following as of December 31, 2017 and 2016 (in thousands):~~

December 31, 2017 December 31, 2016
Deferred rent $ 31,510
$ 29,668
Uncertain tax positions 86,814
73,231
Other long-term liabilities 24,631
15,792
Total $ 142,955
$ 118,691

10. Restructuring

The Company plans to launch its FlexBase program in May 2022, which is a flexible workspace arrangement that allows employees to choose to work from their home office or a Company office. This is a significant change to the way employees worked prior to this program, and prior to office shutdowns as part of the COVID-19 pandemic. Planning for the program commenced in 2021, and in the fourth quarter of 2021, the Company identified certain facilities that were no longer needed. As a result, an impairment of right-of-use assets and leasehold improvements was recognized. The Company incurred expenses of $3.8 million for the year ended December 31, 2021 related to this program. Management is still evaluating the Company's future work environment and additional charges related to such type of action may occur in 2022.

During the fourth quarter of ~~2017,~~2020, management committed to an action to restructure certain parts of the Company ~~with the intent of shifting focus~~ to better position itself to become more ~~critical areas of the business~~agile in delivering its solutions. As a result, certain headcount reductions were necessary and ~~away from products that have not seen expected commercial success. The restructuring is also intended to facilitate cost efficiencies and savings. Certain~~certain capitalized internal-use software charges ~~have been~~were realized for software not yet placed into service that will not be completed and implemented due to this ~~action. In addition, as part~~action. The Company incurred expenses of ~~cost efficiency and savings, certain headcount and facility reductions were made. The total restructuring charge expected as part of~~$31.5 million related to this action, ~~is up to $65.0 million,~~ of which ~~$49.3~~$7.9 million ~~was recognized~~were incurred during the year ended December 31, ~~2017.~~2021 and $23.6 million were incurred during the year ended December 31, 2020. The Company does not expect to incur material additional charges related to this action.

During the ~~first~~fourth quarter of ~~2016,~~2019, management ~~made changes~~committed to an action to restructure certain parts of the ~~Company's organizational structure~~Company to ~~reorganize~~focus on investments with the ~~Company's product and development groups and global sales, services and marketing teams into divisions centered on the Company's customers and solutions. The restructuring~~potential to accelerate revenue growth. As a result, certain headcount reductions were necessary, certain capitalized internal-use software charges ~~relate to severance expenses~~were realized for ~~impacted employees and charges for internal-use~~ software not yet placed into service that will not be completed and ~~launched~~implemented due to ~~changing priorities as part~~this action and an impairment of ~~the reorganization.~~a right-of-use asset was recognized related to exiting a facility no longer needed. The ~~restructuring charges recognized for~~Company incurred expenses of $20.6 million related to this action, of which $13.2 million were incurred during the year ended December 31, ~~2016,~~2020 and $10.2 million were ~~$9.7 million. No~~incurred during the year ended December 31, 2019. The Company also incurred a benefit of $2.8 million during the year ended December 31, 2021 to reflect the release by the landlord of the remaining lease obligation for the exited facility. The Company does not expect to incur any additional charges ~~are expected.~~related to this action.

The Company also recognizes restructuring charges for redundant employees, facilities and contracts associated with completed acquisitions. Restructuring charges related to acquisitions were not material in any of the years ended December 31, 2021, 2020 and 2019.

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The following table summarizes the activity of the Company's accrual for employee severance and related benefits for all restructuring ~~accrual~~actions during the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 (in thousands):


	Employee Severance and Related Benefits
Balance January 1, 2019	$	10,508
Costs incurred	12,455
Cash disbursements	(17,294)

Translation adjustments and other	38
Balance December 31, 2019	5,707
Costs incurred	26,332
Cash disbursements	(10,118)

Translation adjustments and other	130
Balance December 31, 2020	22,051
Costs incurred	6,600
Cash disbursements	(27,095)

Translation adjustments and other	(368)
Balance December 31, 2021	$	1,188

Employee Severance and Related Benefits Software Charges Excess Facilities, Contract Terminations and Other Total
Balance January 1, 2015 $ —
$ —
$ 281
$ 281
Costs incurred 767
—
—
767
Cash disbursements (605 ) —
(56 ) (661 )
Balance December 31, 2015 162
—
225
387
Costs incurred 5,714
4,587
—
10,301
Cash disbursements (4,432 ) —
(56 ) (4,488 )
Software charges —
(4,587 ) —
(4,587 )
Balance December 31, 2016 1,444
—
169
1,613
Costs incurred 17,311
31,965
5,608
54,884
Cash disbursements (5,898 ) —
(3,212 ) (9,110 )
Software and other non-cash charges —
(31,965 ) (1,179 ) (33,144 )
Balance December 31, 2017 $ 12,857
$ —
$ 1,386
$ 14,243

11. Debt

Convertible ~~Senior~~ Notes– Due 2027

In ~~February 2014,~~August 2019, the Company issued ~~$690.0~~$1,150.0 million in par value of convertible senior notes due ~~2019~~2027 (the ~~"Notes"~~"2027 Notes"). The 2027 Notes are senior unsecured obligations of the Company, ~~do not~~ bear regular interest of 0.375%, payable semi-annually in arrears on March 1 and September 1 of each year, and mature on ~~February 15, 2019,~~September 1, 2027, unless repurchased or converted in accordance with their terms prior to maturity.

At their option, holders may convert their 2027 Notes prior to the close of business on the business day immediately preceding ~~August 15, 2018~~May 1, 2027, only under the following circumstances:

•during any calendar quarter commencing after the calendar quarter ended ~~June 30, 2014~~December 31, 2019 (and only during such calendar quarter), if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; or

•during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of 2027 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day; or

•upon the occurrence of specified corporate events.

On or after ~~August 15, 2018,~~May 1, 2027, holders may convert all or any portion of their 2027 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity ~~date, regardless~~date.

In December 2021, the Company made an irrevocable election to settle the principal amount of the ~~foregoing circumstances.~~2027 Notes only in cash. Accordingly, upon conversion, the Company will pay the principal amount in cash and will pay, or deliver, as the case may be, any amount in excess of the principal amount in cash, shares of common stock or a combination of cash and shares of the Company stock, at the Company's election. Prior to this election, upon conversion, the Company, could have elected to deliver to holders cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock for the principal amount.

~~Upon~~

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The initial conversion rate is 8.6073 shares of the Company's common stock per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $116.18 per share, subject to adjustments in certain events, and represents a potential conversion into 9.9 million shares.

In accounting for the issuance of the 2027 Notes, the Company separated the 2027 Notes into liability and equity components. The carrying cost of the liability component was calculated by measuring the fair value of a similar debt obligation that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2027 Notes. The difference between the principal amount of the 2027 Notes and the proceeds allocated to the liability component (“debt discount”) is amortized to interest expense using the effective interest method over the term of the 2027 Notes. The equity component is recorded in additional paid-in capital in the consolidated balance sheet and will not be remeasured as long as it continues to meet the conditions for equity classification.

In accounting for the transaction costs related to the issuance of the 2027 Notes, the Company allocated the total transaction costs incurred to the liability and equity components based on their relative values. Transaction costs attributable to the liability component are being amortized to interest expense over the term of the 2027 Notes, and transaction costs attributable to the equity component are netted against the equity component of the 2027 Notes in stockholders’ equity.

The 2027 Notes consisted of the following components as of December 31, 2021 and 2020 (in thousands):


	December 31, 2021		December 31, 2020
Liability component:
Principal	$	1,150,000	$	1,150,000
Less: debt discount and issuance costs, net of amortization	(169,030)		(196,359)
Net carrying amount	$	980,970	$	953,641

Equity component:	$	220,529	$	220,529

The estimated fair value of the 2027 Notes at December 31, 2021 and 2020 was $1,359.3 million and $1,277.8 million, respectively. The fair value was determined based on the quoted price of the 2027 Notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2 within the fair value hierarchy. Based on the closing price of the Company's common stock of $117.04 on December 31, 2021, the value of the 2027 Notes if converted to common stock was more than the principal amount of $1,150.0 million.

The Company used $100.0 million of the proceeds from the offering to repurchase shares of its common stock, concurrent with the issuance of the 2027 Notes. The repurchase was made in accordance with a share repurchase program previously approved by the board of directors. Additionally, $127.1 million of the proceeds was used for the net cost of the convertible note hedge and warrant transactions. The remaining net proceeds are intended to be used for share repurchases, working capital and general corporate purposes, including potential acquisitions and other strategic transactions.

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Note Hedge

To minimize the impact of potential dilution upon conversion of the 2027 Notes, the Company entered into convertible note hedge transactions with respect to its common stock in August 2019. The Company paid $312.2 million for the note hedge transactions. The note hedge transactions cover approximately 9.9 million shares of the Company’s common stock at a strike price that corresponds to the initial conversion price of the 2027 Notes, also subject to adjustment, and are exercisable upon conversion of the 2027 Notes. The Company determined that the note hedge meets the definition of a derivative and is classified in stockholders’ equity, as the note hedge is indexed to the Company's common stock, and the Company, at its election, may pay or deliver to holders cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock. The ~~initial conversion rate is 11.1651 shares~~Company recorded the purchase of the ~~Company's common stock per $1,000 principal amount, which is equivalent~~hedge as a decrease to ~~an initial conversion price of approximately $89.56 per share, subject to adjustments~~additional paid-in capital. The Company does not recognize subsequent changes in ~~certain events, and represents a potential conversion into 7.7 million shares.~~

~~In accounting for the issuance of the Notes, the Company separated the Notes into liability and equity components.~~

~~The carrying cost of the liability component was calculated by measuring the fair value of a similar debt obligation that does~~

~~not have an associated convertible feature. The carrying amount of the equity component representing the conversion option~~

~~was determined by deducting the~~ fair value of the ~~liability component from the par value of the Notes. The difference between~~

~~the principal amount of the Notes and the proceeds allocated to the liability component (“debt discount”) is amortized to~~

~~interest expense using the effective interest method over the term of the Notes. The equity component is recorded in additional~~

~~paid-in capital in the consolidated balance sheet and will not be re-measured as long as it continues to meet the conditions for~~

~~equity classification.~~

~~Table of Contents~~

~~In accounting for the transaction costs related to the issuance of the Notes, the Company allocated the total transaction~~

~~costs incurred to the liability and equity components based on their relative values. Transaction costs attributable to the liability~~

~~component are being amortized to interest expense over the term of the Notes, and transaction costs attributable to the equity~~

~~component are netted against the equity component of the Notes in stockholders’ equity.~~

~~The Notes consist of the following components as of~~ ~~December 31, 2017 and 2016~~ ~~(in thousands):~~

December 31, 2017 December 31, 2016
Liability component:
Principal $ 690,000
$ 690,000
Less: debt discount and issuance costs, net of amortization (27,087 ) (49,913 )
Net carrying amount $ 662,913
$ 640,087

Equity component: $ 101,276
$ 101,276

~~The estimated fair value of the Notes at December 31, 2017 was $697.0 million. The fair value was determined based~~

~~on the quoted price of the Notes in an inactive market on the last trading day of the reporting period and has been classified as~~

Level 2 within the fair value hierarchy. Based on the closing price of the Company's common stock of $65.04 on December 31, 2017, the value of the Notes if converted to common stock was less than the principal amount of $690.0 million.

The Company used $62.0 million of the proceeds from the offering to repurchase shares of its common stock, concurrent with the issuance of the Notes. The repurchase was made in accordance with a share repurchase program previously approved by the Board of Directors (Note 13). Additionally, $23.3 million of the proceeds was used for the net cost of convertible note hedge ~~and warrant transactions. The remaining net proceeds are for working capital, share repurchases and other general corporate purposes, as well as for potential acquisitions and strategic transactions.~~in its consolidated financial statements.

~~Note Hedge~~

To minimize the impact of potential dilution upon conversion of the Notes, the Company entered into convertible note hedge transactions with respect to its common stock in February 2014. The Company paid $101.3 million for the note hedge transactions. The note hedge transactions cover approximately 7.7 million shares of the Company’s common stock at a strike price that corresponds to the initial conversion price of the Notes, also subject to adjustment, and are exercisable upon conversion of the Notes. The note hedge transactions are intended to reduce dilution in the event of conversion of the Notes.

Warrants

Separately, in ~~February 2014,~~August 2019, the Company entered into warrant transactions, whereby the Company sold warrants to acquire, subject to anti-dilution adjustments, up to ~~7.7~~9.9 million shares of the Company’s common stock at a strike price of approximately ~~$104.49~~$178.74 per share. The Company received aggregate proceeds of ~~$78.0~~$185.2 million from the sale of the warrants. The convertible note hedge and warrant transactions will generally have the effect of increasing the conversion price of the 2027 Notes to approximately ~~$104.49~~$178.74 per share. The Company determined that the warrants meet the definition of a derivative and are classified in stockholders’ equity, as the warrants are indexed to the Company's common stock, and the Company, at its election, may pay or deliver to holders cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock. The Company recorded the proceeds from issuance of the warrants as an increase to additional paid-in capital. The Company does not recognize subsequent changes in fair value of the warrants in its consolidated financial statements.

Convertible Notes – Due 2025

In May 2018, the Company issued $1,150.0 million in par value of convertible senior notes due 2025 (the "2025 Notes"). The 2025 Notes are senior unsecured obligations of the Company, bear regular interest of 0.125%, payable semi-annually on May 1 and November 1 of each year, and mature on May 1, 2025, unless repurchased or converted prior to maturity.

At their option, holders may convert their 2025 Notes prior to the close of business on the business day immediately preceding January 1, 2025, only under the following circumstances:

•during any calendar quarter commencing after the calendar quarter ended June 30, 2018 (and only during such calendar quarter), if the last reported sale price of the Company's common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

•during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of 2025 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day; or

•upon the occurrence of specified corporate events.

On or after January 1, 2025, holders may convert all or any portion of their 2025 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date, regardless of the foregoing circumstances.

In December 2021, the Company made an irrevocable election to settle the principal amount of the 2025 Notes only in cash. Accordingly, upon conversion, the Company will pay the principal amount in cash and will pay, or deliver, as the case may be, any amount in excess of the principal amount in cash, shares of common stock or a combination of cash and shares of the Company stock, at the Company's election. Prior to this election, upon conversion, the Company, could have elected to deliver to holders cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock for the principal amount.

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The initial conversion rate is 10.5150 shares of the Company's common stock per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $95.10 per share, subject to adjustments in certain events, and represents a potential conversion into 12.1 million shares.

In accounting for the issuance of the 2025 Notes, the Company separated the 2025 Notes into liability and equity components. The carrying cost of the liability component was calculated by measuring the fair value of a similar debt obligation that does not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2025 Notes. The difference between the principal amount of the 2025 Notes and the proceeds allocated to the liability component (“debt discount”) is amortized to interest expense using the effective interest method over the term of the 2025 Notes. The equity component is recorded in additional paid-in capital in the consolidated balance sheet and will not be remeasured as long as it continues to meet the conditions for equity classification.

In accounting for the transaction costs related to the issuance of the 2025 Notes, the Company allocated the total transaction costs incurred to the liability and equity components based on their relative values. Transaction costs attributable to the liability component are being amortized to interest expense over the term of the 2025 Notes, and transaction costs attributable to the equity component are netted against the equity component of the 2025 Notes in stockholders’ equity.

The 2025 Notes consisted of the following components as of December 31, 2021 and 2020 (in thousands):


	December 31, 2021		December 31, 2020
Liability component:
Principal	$	1,150,000	$	1,150,000
Less: debt discount and issuance costs, net of amortization	(154,803)		(196,934)
Net carrying amount	$	995,197	$	953,066

Equity component:	$	285,225	$	285,225

The estimated fair value of the 2025 Notes at December 31, 2021 and 2020 was $1,510.4 million and $1,422.8 million, respectively. The fair value was determined based on the quoted price of the 2025 Notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2 within the fair value hierarchy. Based on the closing price of the Company's common stock of $117.04 on December 31, 2021, the value of the 2025 Notes if converted to common stock was more than the principal amount of $1,150.0 million.

The Company used $46.2 million of the proceeds from the offering to repurchase shares of its common stock, concurrent with the issuance of the 2025 Notes. The repurchase was made in accordance with a share repurchase program previously approved by the board of directors. Additionally, $141.8 million of the proceeds was used for the net cost of convertible note hedge and warrant transactions. The Company also used a portion of the net proceeds to repay at maturity the $690.0 million in par value of convertible senior notes due in 2019. The remaining net proceeds are intended to be used for share repurchases, working capital and general corporate purposes, including potential acquisitions and other strategic transactions.

Note Hedge

To minimize the impact of potential dilution upon conversion of the 2025 Notes, the Company entered into convertible note hedge transactions with respect to its common stock in May 2018. The Company paid $261.7 million for the note hedge transactions. The note hedge transactions cover approximately 12.1 million shares of the Company’s common stock at a strike price that corresponds to the initial conversion price of the 2025 Notes, also subject to adjustment, and are exercisable upon conversion of the 2025 Notes. The Company determined that the note hedge meets the definition of a derivative and is classified in stockholders’ equity, as the note hedge is indexed to the Company's common stock, and the Company, at its election, may pay or deliver to holders cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock. The Company recorded the purchase of the hedge as a decrease to additional paid-in capital. The Company does not recognize subsequent changes in fair value of the note hedge in its consolidated financial statements.

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Warrants

Separately, in May 2018, the Company entered into warrant transactions, whereby the Company sold warrants to acquire, subject to anti-dilution adjustments, up to 12.1 million shares of the Company’s common stock at a strike price of approximately $149.18 per share. The Company received aggregate proceeds of $119.9 million from the sale of the warrants. The convertible note hedge and warrant transactions will generally have the effect of increasing the conversion price of the 2025 Notes to approximately $149.18 per share. The Company determined that the warrants meet the definition of a derivative and are classified in stockholders’ equity, as the warrants are indexed to the Company's common stock, and the Company, at its election, may pay or deliver to holders cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock. The Company recorded the proceeds from issuance of the warrants as an increase to additional paid-in capital. The Company does not recognize subsequent changes in fair value of the warrants in its consolidated financial statements.

Convertible Notes – Due 2019

In February 2014, the Company issued $690.0 million in par value of convertible senior notes due 2019 (the "2019 Notes"). The 2019 Notes were senior unsecured obligations of the Company and did not bear regular interest. The 2019 Notes matured and were repaid in full on February 15, 2019 as no repurchases or conversions occurred prior to maturity.

Revolving Credit Facility

In May 2018, the Company entered into a $500.0 million five-year, revolving credit agreement (the “Credit Agreement”). Borrowings under the Credit Agreement may be used to finance working capital needs and for general corporate purposes. The Credit Agreement provides for an initial $500.0 million in revolving loans. Under specified circumstances, the facility can be increased to up to $1.0 billion in aggregate principal amount. The Credit Agreement expires in May 2023.

Borrowings under the Credit Agreement bear interest, at the Company's option, at a base rate plus a spread of 0.00% to 0.25% or an adjusted LIBOR rate plus a spread of 0.875% to 1.25%, in each case with such spread being determined based on the Company's consolidated leverage ratio specified in the Credit Agreement. Regardless of what amounts, if any, are outstanding under the Credit Agreement, the Company is also obligated to pay an ongoing commitment fee on undrawn amounts at a rate of 0.075% to 0.15%, with such rate being based on the Company's consolidated leverage ratio specified in the Credit Agreement.

The Credit Agreement contains customary representations and warranties, affirmative and negative covenants and events of default. Principal covenants include a maximum consolidated leverage ratio and a minimum consolidated interest coverage ratio. There were no outstanding borrowings under the Credit Agreement as of December 31, 2021.

Interest Expense

The 2027 Notes dobear interest at a fixed rate of 0.375%. The interest is payable semi-annually on March 1 and September 1 of each year. The 2027 Notes have an effective interest rate of 3.1% attributable to the conversion feature. The 2025 Notes bear interest at a fixed rate of 0.125%. The interest is payable semi-annually on May 1 and November 1 of each year. The 2025 Notes have an effective interest rate of 4.26% attributable to the conversion feature. The 2019 Notes did not bear regular interest, but ~~have~~had an effective interest rate of 3.2% attributable to the conversion feature. The Company is also obligated to pay ongoing commitment fees under the terms of the Credit Agreement. The following table sets forth total interest expense included in the consolidated statements of income ~~related to the Notes~~ for the years ended December 31, ~~2017~~2021, 2020 and ~~2016~~2019 (in thousands):


	2021		2020		2019
Amortization of debt discount and issuance costs	$	69,697	$	67,153	$	52,059
Coupon interest payable on 2025 Notes	1,437		1,437		1,436
Coupon interest payable on 2027 Notes	4,313		4,312		1,557
Revolving credit facility contractual interest expense	557		548		513
Capitalization of interest expense	(3,672)		(4,330)		(6,201)
Total interest expense	$	72,332	$	69,120	$	49,364

2017 2016
Amortization of debt discount and issuance costs $ 22,826
$ 22,040
Capitalization of interest expense (3,987 ) (3,402 )
Total interest expense $ 18,839
$ 18,638

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12. ~~Commitments and Contingencies~~Leases

~~Operating Lease Commitments~~

The Company ~~leases~~has entered into various operating lease agreements for its ~~facilities under non-cancelable operating leases. These operating leases expire at various dates through December 2034~~offices and ~~generally require the payment of real estate taxes, insurance, maintenance~~co-location assets and ~~operating costs.~~

~~The minimum aggregate future obligations under non-cancelable leases as of~~ ~~December 31, 2017~~ ~~were as follows (in thousands):~~

2018 $ 50,187
2019 49,418
2020 61,031
2021 58,680
2022 56,211
Thereafter 481,471
Total $ 756,998

~~Rent expense for the years ended~~ ~~December 31, 2017, 2016 and 2015~~ ~~was~~ ~~$58.8 million~~, ~~$50.3 million~~ ~~and~~ ~~$47.9 million, respectively.~~related equipment. The Company has also entered into sublease agreements with tenants of various ~~properties~~offices previously vacated by the Company. These operating leases have lease periods expiring between 2022 and 2034. The ~~amounts paid to~~following table is a summary of the ~~Company by these sublease tenants was~~ ~~$3.6 million~~, ~~$1.3 million~~ ~~and~~ ~~$3.6 million~~Company’s operating lease costs for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015, respectively.~~2019 (in thousands):


	Real Estate Arrangements		Co-location Arrangements		Total
2021
Operating lease cost	$	84,100	$	136,673	$	220,773
Short-term lease cost	58		17,660		17,718
Variable lease cost	22,016		31,428		53,444
Sublease income	(21,033)		—		(21,033)
Total operating lease costs	$	85,141	$	185,761	$	270,902

2020
Operating lease cost	$	83,574	$	113,554	$	197,128
Short-term lease cost	229		15,620		15,849
Variable lease cost	21,235		34,259		55,494
Sublease income	(22,064)		—		(22,064)
Total operating lease costs	$	82,974	$	163,433	$	246,407

2019
Operating lease cost	$	63,893	$	96,020	$	159,913
Short-term lease cost	111		14,301		14,412
Variable lease cost	15,610		23,524		39,134
Sublease income	(5,119)		—		(5,119)
Total operating lease costs	$	74,495	$	133,845	$	208,340

Lease costs for real estate arrangements are included in general and administrative expenses in the consolidated statements of income. Lease costs for co-location arrangements are primarily included in cost of revenue.

The following table presents the weighted average remaining lease term and discount rate information related to the Company's operating leases as of December 31, 2021 and 2020:


	December 31, 2021				December 31, 2020
	Real Estate Arrangements		Co-location Arrangements		Real Estate Arrangements		Co-location Arrangements
Weighted average remaining lease term (in years)	11.1		3.9		11.8		4.3
Weighted average discount rate	3.6	%	1.3	%	3.4	%	1.8	%

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Maturities of operating lease liabilities as of December 31, 2021 were as follows (in thousands):


	Real Estate Arrangements		Co-location Arrangements
2022	$	80,070	$	97,494
2023	79,583		53,838
2024	73,506		35,532
2025	69,486		23,130
2026	65,314		14,834
Thereafter	416,280		20,640
Total lease payments	784,239		245,468
Less: imputed interest	139,550		7,387
Total lease liabilities	$	644,689	$	238,081

As of December 31, ~~2017~~,2021, the Company had additional operating leases, primarily for co-location arrangements, that had not yet commenced of $67.2 million, which will commence in 2022, with lease terms of one year to seven years. The table above excludes approximately $196.4 million of future sublease income that is expected to be recognized through 2034.

As of December 31, 2021, the Company had outstanding letters of credit in the amount of ~~$6.4~~$5.7 million,, primarily related to operating leases. The letters of credit remain in effect until the Company fulfills its obligations under these leases or as such obligations expire under the terms of the letters of credit.

~~Purchase~~

13. Commitments and Contingencies

As of December 31, ~~2017~~,2021, the Company had long-term commitments for bandwidth usage ~~and co-location~~ with various networks and ~~ISPs and for asset purchases for network equipment.~~ISPs. Additionally, as of December 31, ~~2017~~,2021, the Company had entered into purchase orders with various vendors. The minimum future commitments as of December 31, ~~2017~~2021 were as follows (in thousands):


	Bandwidth Commitments		Purchase Order Commitments
2022	$	102,144	$	226,926
2023	21,979		58,972
2024	2,100		29,190
2025	—		230
2026	—		61

Total	$	126,223	$	315,379

Bandwidth and Co-location Commitments Purchase Order Commitments
2018 $ 108,988
$ 93,385
2019 27,304
6,175
2020 817
3,205
2021 —
1,385
2022 —
1,190
Thereafter —
—
Total $ 137,109
$ 105,340

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Legal Matters

The Company is party to various litigation matters that management considers routine and incidental to its business. Management does not expect the results of any of these routine actions to have a material effect on the Company’s business, results of operations, financial condition or cash flows.

In July 2016, as part of the resolution of a patent infringement lawsuit filed by the Company against Limelight Networks, Inc. (“Limelight”) in 2006, the Company entered into an agreement that requires Limelight to pay the Company $54.0 million in 12 equal installments over three years, beginning in August 2016. During the ~~years~~year ended December 31, ~~2017 and 2016,~~2019, the Company received ~~$18.0 million and~~ $9.0 million ~~respectively,~~ under this ~~agreement,~~agreement. Substantially all of ~~which $16.4 million and $8.6 million was~~the amounts received were recorded as a gain contingency in the year the cash was received, which reduced general and administrative expenses in the consolidated statements of income, ~~respectively, and $1.6 million and $0.4 million was recorded~~with the remaining as interest ~~income, respectively.~~income.

~~In November 2015, Limelight filed a complaint in the U.S. District Court for the Eastern District~~

Table of Virginia against the Company and XO Communications LLC (“XO”), alleging patent infringement by the two companies. The complaint seeks to recover from the Company and XO monetary damages based upon lost revenue due to infringing technology used by the companies. The Company has agreed to indemnify XO for damages it incurs in this matter. The Company has made counterclaims in the action against Limelight alleging that Limelight has infringed multiple of the Company’s content delivery patents, and the Company is seeking monetary damages based upon lost revenue due to the infringing technology used by Limelight. A trial date on Limelight's patents has been set for April 2018. No provision with respect to this matter has been made in the Company’s consolidated financial statements. An estimate of the possible loss or range of loss cannot be made.Contents

Indemnification

The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these agreements, the Company agrees to indemnify, hold harmless and reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company's business partners, vendors or customers, in connection with its provision of its services. Generally, these obligations are limited to claims relating to infringement of a patent, copyright or other intellectual property right or the Company’s negligence, willful misconduct or violation of law. Subject to applicable statutes of limitation, the term of each of these indemnification agreements is generally perpetual from the time of execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company carries insurance that covers certain third-party claims relating to its services and activities and that could limit the Company’s exposure in that respect.

The Company has agreed to indemnify each of its officers and directors, or employees who serve as officers or directors of our subsidiaries at management's request, during his or her lifetime for certain events or occurrences that happen by reason of the fact that the officer or director is or was or has agreed to serve as an officer or director of the Company. The Company has director and officer insurance policies that may limit its exposure and may enable the Company to recover a portion of certain future amounts paid.

To date, the Company has not encountered material costs as a result of such indemnification obligations and has not accrued any related liabilities in its financial statements. In assessing whether to establish an accrual, the Company considers such factors as the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss.

~~13.~~14. Stockholders’ Equity

Stock Repurchase Program

In ~~October 2013,~~November 2018, the ~~Board~~board of ~~Directors~~directors authorized a ~~$750.0 million~~$1.1 billion repurchase program through December 2021. In October 2021, the board of directors authorized a new $1.8 billion share repurchase program, effective ~~from October~~

~~2013~~January 1, 2022 through December ~~2016. In February 2016, the Board of Directors authorized a $1.0 billion share~~

~~repurchase program that superseded the October 2013 repurchase program and is effective from February 2016~~

~~through December 2018.~~31, 2024. The Company's ~~goal~~goals for the share repurchase ~~program is~~programs are to offset the dilution created by its employee equity compensation programs over time and provide the flexibility to return capital to shareholders as business and market conditions ~~warrant.~~warrant, while still preserving its ability to pursue other strategic opportunities.

During the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015,~~2019, the Company repurchased ~~6.9~~4.7 million, ~~7.0~~2.0 million and ~~4.5~~4.0 million shares, respectively, of its common stock for ~~$361.2~~$522.3 million, ~~$373.8~~$193.6 million and ~~$302.6~~$334.5 million, respectively, pursuant to the ~~current~~ repurchase ~~program as well as prior ones approved by the Board of Directors.~~programs described above. As of December 31, ~~2017~~,2021, the Company had ~~$333.3~~$49.6 million ~~available for future purchases of shares~~ which expired under the ~~current~~ repurchase ~~program.~~program effective through December 31, 2021.

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The ~~Board~~board of ~~Directors~~directors authorized the retirement of all the outstanding shares of its treasury stock as of each of December 31, ~~2017, 2016~~2021, 2020 and ~~2015.~~2019. The retired shares were returned to the number of authorized but unissued shares of the Company's common stock, and the retirement was recorded to additional paid-in capital.

~~14.~~

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15. Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated other comprehensive loss, which is reported as a component of stockholders' equity, for the ~~year~~years ended December 31, ~~2017~~2021 and 2020 (in thousands):


	Foreign Currency Translation		Net Unrealized Gains (Losses) on Investments		Total
Balance as of January 1, 2020	$	(52,924)	$	7,780	$	(45,144)
Other comprehensive income	19,629		5,314		24,943
Balance as of December 31, 2020	(33,295)		13,094		(20,201)
Other comprehensive loss	(38,514)		(10,390)		(48,904)
Balance as of December 31, 2021	$	(71,809)	$	2,704	$	(69,105)

Foreign Currency Translation Net Unrealized Gains (Losses) on Investments Total
Balance as of January 1, 2017 $ (59,017 ) $ 2,795
$ (56,222 )
Other comprehensive income (loss) 34,698
(406 ) 34,292
Balance as of December 31, 2017 $ (24,319 ) $ 2,389
$ (21,930 )

~~The tax effect on accumulated unrealized gains on investments was insignificant as of December 31, 2017 and 2016.~~ Amounts reclassified from accumulated other comprehensive loss to net income were insignificant for the ~~year~~years ended December 31, ~~2017~~.2021 and 2020.

~~15.~~16. Revenue from Contracts with Customers

The Company sells its services through a sales force located both domestically and abroad. Revenue derived from operations outside of the U.S. is determined based on the country in which the sale originated. Other than the U.S., no single country accounted for 10% or more of the Company’s total revenue for any reported period. The following table summarizes revenue by geography included in the Company’s consolidated statements of income for the years ended December 31, 2021, 2020 and 2019 (in thousands):


	2021		2020		2019
U.S.	$	1,837,508	$	1,777,435	$	1,694,211
International	1,623,715		1,420,714		1,199,406
Total revenue	$	3,461,223	$	3,198,149	$	2,893,617

Leveraging its Intelligent Edge Platform and a global sales organization, the Company offers solutions that are developed and maintained through two groups: the Security Technology Group and the Edge Technology Group. The Security Technology Group includes solutions that are designed to protect business online by keeping infrastructure, websites, applications and users safe, while the Edge Technology Group includes solutions that are designed to enable business online, including media delivery, web performance and edge computing solutions. The following table summarizes revenue by product group included in the Company’s consolidated statements of income for the years ended December 31, 2021, 2020 and 2019 (in thousands):


	2021		2020		2019
Security Technology Group	$	1,334,836	$	1,061,622	$	848,733
Edge Technology Group	2,126,387		2,136,527		2,044,884
Total revenue	$	3,461,223	$	3,198,149	$	2,893,617

Most security and content delivery services represent obligations that are satisfied over time as the customer simultaneously receives and consumes the services provided by the Company. Accordingly, the majority of the Company's revenue is recognized over time, generally ratably over the term of the arrangement due to consistent monthly traffic commitments that expire each period. A small percentage of the Company's contracts are satisfied at a point in time, such as one-time professional services contracts, integration services and most license sales where the primary obligation is delivery of the license at the start of the term. In these cases, revenue is recognized at a point in time of delivery or satisfaction of the performance obligation.

During the years ended December 31, 2021, 2020 and 2019, the Company recognized $78.8 million, $69.9 million and $64.1 million of revenue that was included in deferred revenue as of December 31, 2020, 2019 and 2018 respectively.

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As of December 31, 2021, the aggregate amount of remaining performance obligations from contracts with customers was $3.1 billion. The Company expects to recognize approximately 70% of its remaining performance obligations as revenue over the next 12 months, with the remaining recognized thereafter. Remaining performance obligations represent the amount of the transaction price under contracts with customers that are attributable to performance obligations that are unsatisfied or partially satisfied at the reporting date. This consists of future committed revenue for monthly, quarterly or annual periods within current contracts with customers, as well as deferred revenue arising from consideration invoiced in prior periods for which the related performance obligations have not been satisfied. It excludes estimates of variable consideration such as usage-based contracts with no committed contract as well as anticipated renewed contracts. Revenue recognized during the years ended December 31, 2021, 2020 and 2019, related to performance obligations satisfied in previous periods was not material.

17. Employee Benefit Plan

The Company has established a savings plan for its employees that is designed to be qualified under Section 401(k) of the Internal Revenue Code. Eligible employees are permitted to contribute to this plan through payroll deductions within statutory and plan limits. The Company contributed ~~approximately~~ ~~$15.6~~$17.7 million,, ~~$13.7~~ $17.5 million and ~~$13.1~~$16.6 million of cash to the savings plan for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~,2019, respectively, under a matching program.

~~16.~~18. Stock-Based Compensation

Equity Plans

In May 2013, the Company's stockholders approved the Akamai Technologies, Inc. 2013 Stock Incentive Plan (as amended in 2015, 2017 and ~~2017,~~2019, the "2013 Plan"). The 2013 Plan replaced the Akamai Technologies, Inc. 2009 Stock Incentive Plan (the "2009 Plan"), which in turn replaced the Akamai Technologies, Inc. 2006 Stock Incentive Plan, the Akamai Technologies, Inc. 2001 Stock Incentive Plan and the Akamai Technologies, Inc. 1998 Stock Incentive Plan (together with the 2009 Plan, the "Previous Plans"). The Company no longer issues equity awards under the Previous Plans, and they solely exist to satisfy outstanding equity awards previously granted under those plans. The 2013 Plan allows for the issuance of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and cash-based awards for up to ~~18.5~~21.5 million shares of common stock to employees, officers, directors, consultants and advisers of the Company. Additionally, the Company may grant up to 3.8 million shares of common stock thereunder that were available for grant under the 2009 Plan immediately prior to stockholder approval of the 2013 Plan. Any shares of common stock that are currently outstanding under the Previous Plans that are terminated, canceled, surrendered or forfeited will become available to grant under the 2013 Plan. As of December 31, ~~2017,~~2021, the Company had reserved ~~approximately 11.1~~7.0 million shares of common stock available for future issuance of equity awards under the 2013 Plan.

The Company has assumed certain stock option plans and the outstanding stock options of companies that it has acquired (“Assumed Plans”). Stock options outstanding as of the date of acquisition under the Assumed Plans were exchanged for the Company’s stock options and adjusted to reflect the appropriate conversion ratio as specified by the applicable acquisition agreement, but are otherwise administered in accordance with the terms of the Assumed Plans. Stock options under the Assumed Plans generally vest over four years and expire ten years from the date of grant.

The 1999 Employee Stock Purchase Plan ("1999 ESPP") permits eligible employees to purchase up to 1.5 million shares each June 1 and December 1, provided that the aggregate number of shares issued shall not exceed 20.0 million. The 1999 ESPP allows participants to purchase shares of common stock at a 15% discount from the fair market value of the stock as determined on specific dates at ~~six-month~~six-month intervals. During the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015,~~2019, the Company issued ~~1.1~~0.6 million, ~~0.9~~0.7 million and ~~0.7~~0.9 million shares under the 1999 ESPP, respectively, with a weighted average purchase price per share of ~~$40.18, $46.23~~$92.05, $80.71 and ~~$52.05,~~$61.04, respectively. Total cash proceeds from the purchase of shares under the 1999

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ESPP in the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 were ~~$42.3~~$59.7 million, ~~$39.9~~$58.4 million and ~~$34.8~~$53.7 million, respectively. As of December 31, ~~2017,~~2021, approximately ~~$6.1~~$5.8 million had been withheld from employees for future purchases under the 1999 ESPP.

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Stock-Based Compensation Expense

The following table summarizes the components of total stock-based compensation expense included in the Company’s consolidated statements of income for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 (in thousands):


	2021		2020		2019
Cost of revenue	$	27,143	$	24,829	$	22,479
Research and development	65,950		48,855		49,685
Sales and marketing	46,342		65,257		62,150
General and administrative	63,324		58,470		52,826
Total stock-based compensation	202,759		197,411		187,140
Provision for income taxes	(56,084)		(62,153)		(51,177)
Total stock-based compensation, net of taxes	$	146,675	$	135,258	$	135,963

2017 2016 2015
Cost of revenue $ 20,314
$ 18,287
$ 14,145
Research and development 38,864
29,739
23,927
Sales and marketing 60,246
55,407
53,542
General and administrative 44,884
41,073
35,063
Total stock-based compensation 164,308
144,506
126,677
Provision for income taxes (56,237 ) (49,014 ) (49,033 )
Total stock-based compensation, net of taxes $ 108,071
$ 95,492
$ 77,644

In addition to the amounts of stock-based compensation reported in the table above, the Company’s consolidated statements of income for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 also include stock-based compensation reflected as a component of amortization primarily consisting of capitalized internal-use software; the additional stock-based compensation was ~~$17.5~~$32.4 million, ~~$13.8~~$29.6 million and ~~$12.7~~$30.6 million, respectively, before taxes.

The Company uses the Black-Scholes option pricing model to determine the fair value of the Company’s stock option awards. This model requires the input of subjective assumptions, including expected stock price volatility and the estimated term of each award. The estimated fair value of the Company's stock-based awards, less expected forfeitures, is amortized over the awards’ vesting period on a straight-line basis. Expected volatilities are based on the Company’s historical stock price volatility and implied volatility from traded options in its stock. The Company uses historical data to estimate the expected term of options granted within the valuation model. The risk-free interest rate for periods commensurate with the expected term of the option is based on the U.S. Treasury yield rate in effect at the time of grant. The expected dividend yield is zero, as the Company currently does not pay a dividend and does not anticipate doing so in the future.

The grant-date fair values of awards granted under the 1999 ESPP during the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 were estimated using the Black-Scholes option pricing model with the following weighted-average assumptions:


	2021		2020		2019
Expected term (in years)	0.5		0.5		0.5
Risk-free interest rate	0.1	%	0.7	%	2.3	%
Expected volatility	32.2	%	30.4	%	29.6	%
Dividend yield	—	%	—	%	—	%

2017 2016 2015
Expected term (in years) 0.5
0.5
0.5
Risk-free interest rate 1.0 % 0.5 % 0.2 %
Expected volatility 35.8 % 36.2 % 28.0 %
Dividend yield — % — % — %

For the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~,2019, the weighted average fair value of awards granted under the 1999 ESPP was ~~$13.60~~$36.17 per share, ~~$14.54~~$32.30 per share and ~~$15.63~~$20.90 per share, respectively.

As of December 31, ~~2017~~,2021, total pre-tax unrecognized compensation cost for stock options, restricted stock units, deferred stock units and shares of common stock issued under the 1999 ESPP was ~~$267.8 million~~.$315.5 million. The expense is expected to be recognized through ~~2021~~2025 over a weighted average period of ~~1.9~~1.8 years. years.

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Stock Options

The following table summarizes stock option activity during the year ended December 31, ~~2017~~:2021:


	Shares (in thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2021	6	$	11.60
Exercised	(5)	3.94


Outstanding at December 31, 2021	1	$	41.08	1.55	$	100
Exercisable at December 31, 2021	1	$	41.08	1.55	$	100
Vested or expected to vest December 31, 2021	1	$	41.08	1.55	$	100

Shares
(in thousands)

Weighted Average Exercise Price
Weighted Average Remaining Contractual Term
(in years)

Aggregate Intrinsic Value
(in thousands)
Outstanding at January 1, 2017 874
$ 35.51

Exercised (522 ) 34.68

Forfeited (13 ) 47.26

Outstanding at December 31, 2017 339
$ 36.36
1.66 $ 9,734
Exercisable at December 31, 2017 338
$ 36.31
1.66 $ 9,708
Vested or expected to vest December 31, 2017 339
$ 36.35
1.66 $ 9,731

The total pre-tax intrinsic value of options exercised during the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 was ~~$12.3~~$0.6 million,, ~~$18.3~~ $1.0 million and ~~$53.6~~$3.9 million,, respectively. The total fair value of options vested for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 was ~~$1.2 million~~, ~~$6.5 million~~ ~~and~~ ~~$10.3 million, respectively.~~insignificant.

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on the Company’s closing stock price of ~~$65.04~~$117.04 on December 31, ~~2017~~,2021, that would have been received by the option holders had all option holders exercised their “in-the-money” options as of that date. The total number of shares issuable upon the exercise of “in-the-money” options exercisable as of December 31, ~~2017~~2021 was ~~0.3 million~~.1,315.

Deferred Stock Units

The Company has granted deferred stock units ("DSUs") to non-employee members of its ~~Board~~board of ~~Directors.~~directors. Each DSU represents the right to receive ~~one~~1 share of the Company’s common stock upon vesting. The holder may elect to defer receipt of the vested shares of stock represented by the DSU for a period of at least one year but not more than ten years from the grant date. DSUs vest 100% on the first anniversary of the grant date. If a director has completed one year of ~~Board~~ service, vesting of 100% of the DSUs held by such director will accelerate at the time of his or her departure from the Board.

The following table summarizes the DSU activity for the year ended December 31, ~~2017~~:2021:


	Units (in thousands)	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2021	114	$	65.09
Granted	21	114.56
Vested and distributed	(37)	72.39
Outstanding at December 31, 2021	98	$	72.96

Units
(in thousands)
Weighted Average Grant Date Fair Value
Outstanding at January 1, 2017 164
$ 44.90
Granted 44
47.50
Vested and distributed (31 ) 54.97
Outstanding at December 31, 2017 177
$ 43.77

The total pre-tax intrinsic value of DSUs that were vested and distributed during the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 was ~~$1.5~~$4.1 million,, ~~$1.4~~ $0.9 million and ~~$10.7~~$7.7 million,, respectively. The total fair value of DSUs that were vested and distributed during the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 was ~~$1.7~~$2.7 million,, ~~$1.6~~ $0.7 million and ~~$4.9~~$4.9 million,, respectively. The grant-date fair value is calculated based upon the Company’s closing stock price on the date of grant. For the years ended December 31, 2021, 2020 and 2019, the weighted average fair value of DSU awards granted was $114.56 per share, $100.58 per share and $76.62 per share, respectively. As of December 31, ~~2017~~, ~~44,000~~2021, 20,990 DSUs were unvested, with an aggregate intrinsic value of approximately ~~$2.9~~$2.5 million and a weighted average remaining contractual life of approximately 0.4 ~~years~~.years. These units are expected to vest in May ~~2018~~.2022.

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Restricted Stock Units

The following table summarizes the different types of restricted stock units ("RSUs") granted by the Company during the year ended December 31, ~~2017~~2021 (in thousands):



			December 31, ~~2017~~2021
RSUs with service-based vesting conditions			~~3,411~~2,818
RSUs with market-based vesting conditions			~~116~~85
RSUs with performance-based vesting conditions			82396
Total			~~3,609~~3,299

RSUs represent the right to receive ~~one~~1 share of the Company’s common stock upon vesting. RSUs are granted at the discretion of the ~~Board~~board of ~~Directors,~~directors, a committee thereof or, subject to defined limitations, the Chief Executive Officer of the Company, acting as a committee of one director, to whom such authority has been delegated. The Company has issued RSUs that vest based on the passage of time assuming continued service with the Company, RSUs that vest ~~only upon the achievement of defined performance metrics tied primarily to revenue and income targets and other key financial performance indicators and RSUs that vest~~ based upon total shareholder return ("TSR") measured against the benchmark TSR of a peer ~~group.~~group, and RSUs that vest only upon the achievement of defined performance metrics tied primarily to revenue and earnings targets.

For RSUs with service-based vesting conditions, the fair value is calculated based upon the Company’s closing stock price on the date of grant, and the stock-based compensation expense is being recognized over the vesting period. Most RSUs with service-based vesting provisions vest in installments over a three- or four-year period following the grant date.

~~Beginning in the first quarter of 2016, the Company granted RSUs with market-based vesting conditions to certain of its executive officers.~~ The Company uses the Monte Carlo simulation model to determine the fair value of the ~~Company’s~~Company's RSUs based on TSR. This model requires the input of assumptions, including the estimated term of each award, the risk-free interest rate, historical stock price volatility of the Company's shares and historical stock price volatility of peer-company shares. The grant-date fair values of the ~~Company's~~TSR-based RSUs ~~with market-based vesting conditions~~ granted during the ~~year~~years ended December 31, ~~2017~~2021, 2020 and ~~2016~~2019 were estimated using a Monte Carlo simulation model with the following assumptions:


	2021		2020		2019
Expected term (in years)	3.0		3.0		3.0
Risk-free interest rate	0.3	%	0.7	%	2.5	%
Akamai historical share price volatility	32.7	%	28.2	%	32.8	%
Average volatility of peer-company share price	39.6	%	28.9	%	27.0	%

2017 2016
Expected term (in years) 3.0
3.0
Risk-free interest rate 1.4 % 0.8 %
Akamai historical share price volatility 33.2 % 34.3 %
Average volatility of peer-company share price 27.1 % 27.6 %

For the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015,~~2019, management measured compensation expense for performance-based RSUs based upon a review of the Company’s expected achievement against specified financial performance targets. Such compensation cost is being recorded using a graded-vesting method for each series of grants of performance-based RSUs, to the extent management has deemed that such awards are probable of vesting based upon the expected achievement against the specified targets. On a periodic basis, management reviews the Company’s expected performance and adjusts the compensation cost, if needed, at such time.

The following table summarizes the RSU activity for the year ended December 31, ~~2017~~:2021:


	Units (in thousands)	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2021	4,556	$	83.96
Granted	3,299	99.09
Vested	(2,851)	81.74
Forfeited	(615)	90.44
Outstanding at December 31, 2021	4,389	$	95.75

Units
(in thousands)

Weighted Average Grant Date Fair Value
Outstanding at January 1, 2017 5,710

$ 59.51
Granted 3,609

59.60
Vested (2,910 )
59.59
Forfeited (566 )
46.65
Outstanding at December 31, 2017 5,843

$ 59.94

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The total pre-tax intrinsic value of RSUs that vested during the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 was ~~$168.6~~$226.4 million,, ~~$128.5~~ $192.5 million and ~~$153.6~~$189.4 million,, respectively. The total fair value of RSUs that vested during the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 was ~~$173.6~~$233.0 million,, ~~$140.4~~ $198.9 million and ~~$105.3~~$195.5 million,, respectively. The grant-date fair value of each RSU is calculated based upon the Company’s closing stock price on the date of grant. For the years ended December 31, 2021, 2020 and 2019, the weighted average fair value of RSU awards granted was $99.09 per share, $92.42 per share and $72.30 per share, respectively. As of December 31, ~~2017~~, ~~5.8~~2021, 4.4 million RSUs were outstanding and unvested, with an aggregate intrinsic value of ~~$380.2~~$513.9 million and a weighted average remaining vesting period of approximately ~~1.9~~1.7 years. years. These RSUs are expected to vest on various dates through ~~October 2021~~.2025.

~~17.~~19. Income Taxes

The components of income before provision for income taxes were as follows for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 (in thousands):


	2021		2020		2019
U.S.	$	70,300	$	45,074	$	24,253
Foreign	657,921		571,008		508,228
Income before provision for income taxes	$	728,221	$	616,082	$	532,481

2017 2016 2015
U.S. $ 94,518
$ 273,176
$ 233,247
Foreign 221,604
186,270
223,377
Income before provision for income taxes $ 316,122
$ 459,446
$ 456,624

The provision for income taxes consisted of the following for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 (in thousands):


	2021		2020		2019
Current tax (benefit) provision:
Federal	$	11,824	$	(1,765)	$	(22,704)
State	8,515		5,346		3,835
Foreign	90,026		76,162		71,286
Deferred tax (benefit) provision:
Federal	(33,366)		(19,845)		(13,987)
State	(14,611)		(14,509)		(12,212)
Foreign	(4,358)		(6,023)		4,968
Change in valuation allowance	4,541		6,556		22,164
Total	$	62,571	$	45,922	$	53,350

2017 2016 2015
Current tax provision (benefit):
Federal $ 41,090
$ 89,816
$ 70,298
State 6,336
6,238
(1,750 )
Foreign 51,244
39,952
62,572
Deferred tax provision (benefit):
Federal (17,136 ) 4,265
23,381
State 21,689
(86 ) (742 )
Foreign (4,992 ) 3,916
(18,536 )
Change in valuation allowance (430 ) (787 ) (5 )
Total $ 97,801
$ 143,314
$ 135,218

The current tax provision includes income taxes incurred on intercompany sales, primarily intellectual property. For financial statement purposes this amount is required to be deferred on the balance sheet with the offset recorded as a deferred tax benefit. The income tax that is deferred is amortized into earnings over the economic life of the intellectual property that was sold. The amount of the current year deferral included in the Company’s deferred tax provision was a benefit of $16.0 million, $9.1 million and $15.5 million in the years ended December 31, 2017, 2016 and 2015, respectively.

~~Table of Contents~~

The Company’s effective tax rate differed from the U.S. federal statutory tax rate as follows for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015:~~2019:


	2021		2020		2019
U.S. federal income tax rate	21.0	%	21.0	%	21.0	%
State taxes	0.7		1.0		1.0
Stock-based compensation	0.1		(0.6)		0.3
U.S. federal, state and foreign research and development credits	(3.7)		(4.4)		(6.0)
Foreign earnings	(7.3)		(7.7)		(6.1)

Nondeductible (nontaxable) foreign items	—		(0.4)		0.7



Release of uncertain tax position reserve	(1.0)		(0.9)		(5.9)

Intercompany sale of intellectual property	—		0.2		1.9
Valuation allowance	0.6		1.1		4.2
Other	(1.8)		(1.8)		(1.1)
	8.6	%	7.5	%	10.0	%

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2017 2016 2015
U.S. federal income tax rate 35.0 % 35.0 % 35.0 %
State taxes 1.6
2.0
1.7
Share-based compensation 3.7
2.7
1.9
U.S. federal, state and foreign research and development credits (6.9 ) (3.3 ) (4.1 )
Foreign earnings (7.8 ) (3.4 ) (4.6 )
Domestic production activities deduction (0.7 ) (1.7 ) (1.2 )
U.S Tax Cuts and Jobs Act, net 8.2
—
—
Impact of acquisition-related uncertain tax position (2.9 ) —
—
Other 0.7
(0.1 ) 0.9
30.9 % 31.2 % 29.6 %

In December 2017 the TCJA was enacted, making significant changes to the U.S. Internal Revenue Code. Changes include a corporate income tax rate decrease from 35% to 21%, the implementation of a modified territorial tax system, a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017 and the repeal of the domestic production activities deduction, among other items.

The Company has recognized a provisional net tax expense of $26.0 million for the impact of the TJCA which is comprised of a one-time transition tax expense of $43.4 million on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017, offset by a $17.4 million tax benefit related to the re-measurement of deferred tax assets and liabilities due to the lower corporate income tax rate. Any subsequent adjustments to the provisional amounts will be recorded to current tax expense or benefit in the quarter of 2018 in which the analysis is completed.

The components of the net deferred tax assets and liabilities and the related valuation allowance as of December 31, ~~2017~~2021 and ~~2016~~2020 were as follows (in thousands):


	2021		2020
Accrued bonus	$	26,261	$	25,480
Deferred revenue	6,683		11,146

Operating lease liability	133,298		141,212
Stock-based compensation	21,507		23,629
NOLs	53,088		25,255

Tax credit carryforwards	88,710		110,254

Convertible senior notes interest	18,552		20,953
Depreciation and amortization	85,438		—
Other	15,679		11,531
Deferred tax assets	449,216		369,460
Depreciation and amortization	—		(6,974)

Acquired intangible assets	(86,567)		(59,128)

Operating lease right-of-use asset	(124,833)		(127,524)
Deferred commissions	(13,468)		(14,952)
Internal-use software development costs capitalized	(59,837)		(58,820)

Deferred tax liabilities	(284,705)		(267,398)
Valuation allowance	(37,143)		(32,602)
Net deferred tax assets	$	127,368	$	69,460

2017 2016
Accrued bonus $ 19,950
$ 18,390
Deferred revenue 8,861
10,055
Deferred rent 8,000
12,592
Stock-based compensation 20,557
32,030
Net operating losses 26,698
7,855
Unrealized losses 1,239
1,862
Tax credit carryforwards 49,135
23,629
License income 6,611
16,932
Other 11,909
7,048
Deferred tax assets 152,960
130,393
Depreciation and amortization (13,933 ) (10,470 )
Acquired intangible assets (48,781 ) (44,788 )
Internal-use software development costs capitalized (54,687 ) (77,375 )
Deferred tax liabilities (117,401 ) (132,633 )
Valuation allowance —
(430 )
Net deferred tax assets (liabilities) $ 35,559
$ (2,670 )

~~The Company re-measured the U.S.~~Valuation allowances will be recognized on deferred tax assets if it is more-likely-than-not that some or all of the deferred tax assets will not be utilized. In measuring deferred tax assets, the Company considers all available evidence, both positive and ~~liabilities as~~negative, to determine whether a valuation allowance is needed. As of December 31, ~~2017 included~~2021, the Company recorded a $37.1 million valuation allowance against deferred tax assets related to tax credits and state and foreign NOLs in which it is more-likely-than-not that such attributes will expire prior to utilization. The increase in the ~~table above at the applicable tax rate of 21% in accordance with the TCJA.~~valuation allowance during 2021 was $4.5 million.

~~Table of Contents~~

The table below summarizes the Company's NOL and tax credit carryforwards in U.S. federal, state and foreign jurisdictions as of December 31, ~~2017~~2021 and ~~2016~~2020 (in thousands, except ~~for~~ years):


	2021		2020		Expirations at Various Dates Through:
NOL carryforwards:
Federal	$	44,000	$	59,200	2037
State	15,500		24,800		2041
Foreign	180,100		40,800		2035
Federal and state research and development tax credit and other credit carryforwards	113,500		132,800		2037

2017 2016 Expirations at Various Dates Through:
NOL carryforwards:
Federal $ 99,200
$ 16,500
2037
State 89,500
11,400
2035
Foreign —
—
—
Federal and state research and development tax credit and other credit carryforwards 65,900
41,500
2032

The Company's U.S. federal and state NOL carryforwards relate to acquisitions completed in ~~2012~~2021, 2019, 2017 and ~~2017.~~2012. Foreign NOL carryforwards relate to an acquisition completed in 2021 and losses due to the difference in local tax laws.

Table of Contents

As of December 31, ~~2017, foreign~~2021, accumulated earnings outside the U.S. totaled $1.2 billion, the majority of ~~approximately $603.2 million~~which have been taxed due to the one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings and the tax on global intangible low taxed income required by the ~~TCJA.~~U.S. Tax Cuts and Jobs Act ("TCJA"). No provision for U.S. income and foreign withholding taxes has been provided for any remaining undistributed foreign earnings not subject to tax under the ~~transition tax,~~TCJA, or any additional basis differences inherent in these entities, as these amounts continue to be indefinitely reinvested. Determination of the amount of the unrecognized deferred tax liability on outside basis differences is not practicable because of the complexity of laws and regulations, the varying tax treatment of alternative repatriation scenarios and the variation due to multiple potential assumptions relating to the timing of any future repatriation.

The following is a roll forward of the Company’s unrecognized tax benefits for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 (in thousands):


	2021		2020		2019
Balance at beginning of year	$	24,105	$	27,359	$	64,892
Gross increases – tax positions of prior periods	4,293		2,539		74
Gross increases – current period tax positions	3,607		1,946		2,006
Gross decreases – tax positions of prior periods	(816)		(3,540)		(5,201)
Gross decreases – lapse of applicable statute of limitations	(8,626)		(4,199)		(28,672)
Gross decreases – settlements	—		—		(5,740)
Balance at end of year	$	22,563	$	24,105	$	27,359

2017 2016 2015
Balance at beginning of year $ 69,117
$ 65,290
$ 33,320
Gross increases — tax positions of prior periods 2,692
6,391
11,238
Gross increases — current period tax positions 27,163
6,252
27,043
Gross decreases — tax positions of prior periods (277 ) (6,491 ) (5,739 )
Gross decreases — lapse of applicable statute of limitations (12,850 ) (287 ) (257 )
Gross decreases — settlements —
(2,038 ) (315 )
Balance at end of year $ 85,845
$ 69,117
$ 65,290

As of December 31, ~~2017, 2016~~2021, 2020 and ~~2015,~~2019, the Company had ~~approximately $90.7~~$23.1 million, ~~$77.1~~$29.5 million and ~~$72.3~~$32.6 million of unrecognized tax benefits, respectively. ~~The total~~Total interest and penalties for unrecognized tax benefits ~~include $10.7~~includes $7.2 million, ~~$13.7~~$7.7 million and ~~$10.0~~$7.8 million ~~of accrued interest and penalties~~ as of December 31, ~~2017, 2016~~2021, 2020 and ~~2015,~~2019, respectively. Interest and penalties related to unrecognized tax benefits are recorded in the provision for income taxes and were ~~$2.3~~$0.5 million, ~~$3.9~~$1.2 million and ~~$2.2~~$1.1 million for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015,~~2019, respectively. The amount of unrecognized tax benefits that, if recognized, would impact the effective income tax rate is ~~approximately $76.0~~$23.1 million.

As of December 31, ~~2017,~~2021, it is reasonably possible that ~~$3.3~~$4.8 million of unrecognized tax benefits may be recognized bywithin the ~~end of 2018 as a result of~~next 12 months due to the expiration of local statutes of limitations. Certain U.S. state and foreign income tax returns from 2011 through ~~2016~~2020 are currently under audit. The Company has reserved for those positions that are not more-likely-than-not to be sustained.

The Company is also involved in litigation related to certain adverse audit ~~including~~determinations. In the ~~Commonwealth~~second quarter of ~~Massachusetts.~~2018, the Company filed an appeal with the Massachusetts Appellate Tax Board contesting the adverse audit findings related to certain tax benefits and exemptions. The appeal hearing was held in late 2019. In July 2020, the Massachusetts Appellate Tax Board ruled in the Company's favor; however the Massachusetts Department of Revenue has appealed the decision in January 2022. The Company has determined that it is more-likely-than-not that it will prevail, and no reserve has been recorded related to these controversies. However, over the next 12 months, the Company's current assumptions and positions could change based on appeal decisions and other events impacting its analysis. Such events, if resolved unfavorably, could significantly impact the Company’s effective income tax rate and results of operations. The Company has estimated that an adverse ruling related to its Massachusetts controversy could result in a gross income tax charge of approximately $49.0 million, which could be partially offset by certain state tax credits of $32.0 million which are not currently benefited as a result of the Company's valuation allowance assessment.

~~18.~~20. Net Income per Share

Basic net income per share is computed using the weighted average number of common shares outstanding during the applicable period. Diluted net income per share is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential common stock. Potential common stock consists of shares issuable pursuant to stock options, RSUs, DSUs, convertible senior notes and warrants issued by the Company. The dilutive effect of outstanding awards and convertible securities is reflected in diluted earnings per share by application of the treasury stock method.

Table of Contents

The following table sets forth the components used in the computation of basic and diluted net income per share for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 (in thousands, except per share data):


	2021		2020		2019
Numerator:
Net income	$	651,642	$	557,054	$	478,035
Denominator:
Shares used for basic net income per share	162,665		162,490		162,706
Effect of dilutive securities:
Stock options	21		31		68
RSUs and DSUs	1,518		1,819		1,799
Convertible senior notes	1,600		873		—
Warrants related to issuance of convertible senior notes	—		—		—
Shares used for diluted net income per share	165,804		165,213		164,573
Basic net income per share	$	4.01	$	3.43	$	2.94
Diluted net income per share	$	3.93	$	3.37	$	2.90

2017
2016
2015
Numerator:
Net income $ 218,321
$ 316,132
$ 321,406
Denominator:
Shares used for basic net income per share 171,559
174,917
178,391
Effect of dilutive securities:

Stock options 260
384
794
RSUs and DSUs 892
914
1,230
Convertible senior notes —
—
—
Warrants related to issuance of convertible senior notes —
—
—
Shares used for diluted net income per share 172,711
176,215
180,415
Basic net income per share $ 1.27
$ 1.81
$ 1.80
Diluted net income per share $ 1.26
$ 1.79
$ 1.78

For the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~,2019, certain potential outstanding shares from stock options, service-based RSUs, convertible notes and warrants were excluded from the computation of diluted net income per share because the effect of including these items was anti-dilutive. Additionally, certain performance-based RSUs were excluded from the computation of diluted net income per share because the underlying performance conditions for such RSUs had not been met as of these dates. The number of potentially outstanding shares excluded from the computation of diluted net income per share for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~2019 (in thousands):


	2021	2020	2019

Service-based RSUs	776	591	763
Market-and performance-based RSUs	1,199	1,409	1,349
Convertible senior notes	9,898	12,922	21,991
Warrants related to issuance of convertible senior notes	21,991	21,991	21,991
Total shares excluded from computation	33,864	36,913	46,094

21. Akamai Foundation

2017 2016 2015
Stock options 9
58
22
Service-based RSUs 3,258
2,262
660
Performance-based RSUs 1,054
690
1,007
Convertible senior notes 7,704
7,704
7,704
Warrants related to issuance of convertible senior notes 7,704
7,704
7,704
Total shares excluded from computation 19,729
18,418
17,097

The Akamai Foundation is a private non-profit organization founded by certain current and former employees of the Company in 2000 (the “Foundation”). The Company has the right to appoint the directors of the Foundation, but receives no economic benefit from the Foundation’s initiatives, therefore the Foundation is not consolidated. The Foundation's initiatives are to support youth education, with a focus on mathematics and science, as well as other charitable causes. In 2020, the Foundation expanded its initiatives to include supporting increased diversity in the technology industry. The Company contributed $20.0 million in that year in support of the Foundation's expanded initiatives. This expense is included in general and administrative expenses in the consolidated statements of income for the year ended December 31, 2020.

~~19.~~

22. Segment and Geographic Information

The Company’s chief operating decision-maker is the chief executive officer and the executive management team. As of December 31, ~~2017~~,2021, the Company ~~operated in one industry~~is currently organized and operates as 1 reportable and operating segment: providing ~~cloud services for delivering, optimizing~~solutions to power and ~~securing content and business applications over the Internet.~~protect digital experiences. The Company is not organized by market and is managed and operated as one business. A single management team that reports to the chief executive officer comprehensively manages the entire business. The Company does not operate any material separate lines of business or separate business entities with respect to its services. Accordingly, the Company does not accumulate discrete financial information with respect to separate ~~divisions~~entities and does not have separate operating or reportable segments.

Table of Contents

The Company deploys its servers into networks worldwide. ~~As of December 31, 2017, the Company had approximately $311.7 million and $249.8 million of~~The following table summarizes net property and equipment, excluding internal-use software and operating lease right-of-use assets, located in the U.S. and foreign locations, ~~respectively. As~~as of December 31, ~~2016, the Company had approximately $297.8 million~~2021 and ~~$231.8 million of net property and equipment, excluding internal-use software, located in the U.S. and foreign locations, respectively.~~2020 (in thousands):


	December 31, 2021		December 31, 2020
Property and equipment, net, excluding internal-use software, located in the U.S.	$	568,040	$	572,391
Property and equipment, net, excluding internal-use software, located in foreign locations	510,695		487,174
Operating lease right-of-use assets located in the U.S.	625,424		611,959
Operating lease right-of-use assets located in foreign locations	190,330		181,986

The Company sells its services and licenses through a sales force located both domestically and abroad. Revenue derived from operations outside of the U.S. is determined based on the country in which the sale ~~originated and was $855.0 million, $720.0 million and $593.0 million for the years ended December 31, 2017, 2016 and 2015, respectively.~~originated. Other than the U.S., no single country accounted for 10% or more of the Company’s total revenue for any reported period. The following table summarizes revenue derived from operations outside of the U.S. for the years ended December 31, 2021, 2020 and 2019 (in thousands):


	2021		2020		2019
Revenue derived from operations outside of the U.S.	$	1,623,715	$	1,420,714	$	1,199,406

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~~20. Quarterly Financial Results (unaudited)~~

(in thousands, except per share data) First Quarter Second Quarter Third Quarter Fourth Quarter
Year ended December 31, 2017:
Revenue $ 609,237
$ 608,908
$ 621,399
$ 663,452
Cost of revenue (exclusive of amortization of acquired intangible assets) 205,703
214,650
225,468
229,937
Net income 80,930
57,772
60,512
19,107
Basic net income per share 0.47
0.33
0.35
0.11
Diluted net income per share 0.46
0.33
0.35
0.11
Year ended December 31, 2016:
Revenue $ 567,725
$ 572,135
$ 584,065
$ 616,124
Cost of revenue (exclusive of amortization of acquired intangible assets) 194,736
206,323
204,467
203,475
Net income 74,858
73,635
76,000
91,639
Basic net income per share 0.42
0.42
0.44
0.53
Diluted net income per share 0.42
0.42
0.43
0.52

~~Table of Contents~~

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal

executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and

procedures as of December 31, ~~2017.~~2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and ~~15d-15~~

~~(e)~~15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a

company that are designed to ensure that information required to be disclosed by a company in the reports that it files or

submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the

Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation,

controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or

submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal

executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosures. Management

recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance

of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of

possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, ~~2017,~~2021, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures

were effective at the reasonable assurance level.

Management’s Annual Report on Internal Control over Financial Reporting

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the company's principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

•pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

To assist management, we have established an internal audit function to verify and monitor our internal controls and procedures. Because of its inherent limitations, however, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2017~~.2021. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework 2013.

Based on our assessment, management, with the participation of our Chief Executive Officer and Chief Financial Officer, concluded that, as of December 31, ~~2017~~,2021, our internal control over financial reporting was effective based on those criteria at the reasonable assurance level.

The effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2017~~2021 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report, which is included in Item 8 of this annual report on Form 10-K.

Table of Contents

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the fourth quarter ended December 31, ~~2017~~2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The complete response to this Item regarding the backgrounds of our executive officers and directors and other information required by Items 401, 405 and 407 of Regulation S-K will be contained in our definitive proxy statement for our ~~2018~~2022 Annual Meeting of Stockholders under the sections captioned “Executive Compensation Matters,” ~~“Section~~“Delinquent Section 16(a) ~~Beneficial Ownership Reporting Compliance”~~Reports” and “Corporate Governance ~~Matters”~~Highlights” and is incorporated by reference herein.

Our executive officers and directors and their positions as of ~~March 1, 2018,~~February 28, 2022, are as follows:



Name		Position
F. Thomson Leighton		Chief Executive Officer and Director (Principal Executive Officer)
~~James Benson~~Edward McGowan		Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial ~~and~~Officer)
Laura Howell		Chief Accounting Officer (Principal Accounting Officer)
Aaron Ahola		~~Senior~~Executive Vice President, General Counsel and Corporate Secretary
Robert Blumofe		Executive Vice President and Chief Technology Officer
Adam Karon		Chief Operating Officer and General Manager of the Edge Technology Group
Kim Salem-Jackson		Executive Vice President and Chief Marketing Officer
Paul Joseph		Executive Vice President, Global Sales and Services
Mani Sundaram		Executive Vice President and General ~~Counsel~~Manager of the Security Technology Group
~~Robert Blumofe~~Anthony Williams		~~Executive Vice President – Platform and GM Enterprise Division~~
~~James Gemmell~~	Executive Vice President and Chief Human Resources Officer
~~Adam Karon~~Sharon Bowen		~~Executive Vice President and GM Media and Carrier Divisions~~Director
~~Rick McConnell~~Marianne Brown		~~President and GM Web Division~~Director
~~William Wheaton~~Monte Ford		~~Executive Vice President and Chief Strategy Officer~~Director
~~George H. Conrades~~Jill Greenthal		Director
~~Pamela J. Craig~~Daniel Hesse		Director
~~Monte E. Ford~~Tom Killalea		Director
~~Jill A. Greenthal~~Jonathan Miller		Director
~~Daniel R. Hesse~~Madhu Ranganathan		Director
~~Jonathan F. Miller~~Bernardus Verwaayen		Director
~~Paul Sagan~~William Wagner		Director
~~Frederic V. Salerno~~	~~Director~~
~~Naomi O. Seligman~~	~~Director~~
~~Bernardus Verwaayen~~	~~Director~~

We have adopted a written code of business ethics, as amended, that applies to our principal executive officer, principal financial officer and principal accounting officer or persons serving similar functions and all of our other employees and members of our ~~Board~~board of ~~Directors.~~directors. The text of our amended code of ethics is available on our website at www.akamai.com. If we amend, or grant a waiver under, our code of business ethics that applies to our principal executive officer, principal financial officer and principal accounting officer, or persons performing similar functions, we intend to post information about such amendment or waiver on our website at www.akamai.com.

Table of Contents

Item 11. Executive Compensation

The information required by this Item is incorporated by reference herein to our definitive proxy statement for our ~~2018~~2022 Annual Meeting of Stockholders under the sections captioned “Executive Compensation Matters,” “Corporate Governance ~~Matters,~~Highlights,” “Compensation Committee Interlocks and Insider Participation” and “Director Compensation.”

~~Table of Contents~~

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is incorporated by reference herein to our definitive proxy statement for our ~~2018~~2022 Annual Meeting of Stockholders under the sections captioned “Executive Compensation Matters,” “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance Under Equity Compensation Plans.”

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated by reference herein to our definitive proxy statement for our ~~2018~~2022 Annual Meeting of Stockholders under the sections captioned “Certain Relationships and Related Party ~~Transactions,~~Transactions; Code of Ethics; Interest in Annual Meeting Matters,” “Corporate Governance ~~Matters”~~Highlights” and “Compensation Committee Interlocks and Insider Participation.”

Item 14. Principal Accounting Fees and Services

PART IV

Item 15. Exhibits, Financial Statement Schedules


~~(a)~~	~~Documents Filed as Part of this Annual Report on Form 10-K~~


1.	~~Financial Statements (included in Item 8 of this Annual Report on Form 10-K):~~

(a)Documents Filed as Part of this Annual Report on Form 10-K

1.Financial Statements (included in Item 8 of this Annual Report on Form 10-K):

•Report of Independent Registered Public Accounting Firm

•Consolidated Balance Sheets as of December 31, ~~2017~~2021 and ~~2016~~

2020

•Consolidated Statements of Income for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~

2019

•Consolidated Statements of Comprehensive Income for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~

2019

•Consolidated Statements of Cash Flows for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~

2019

•Consolidated Statements of Stockholders' Equity for the years ended December 31, ~~2017, 2016~~2021, 2020 and ~~2015~~

2019

•Notes to Consolidated Financial Statements


2.	~~Financial Statement Schedules~~

2.Financial Statement Schedules

Financial statements schedules are omitted as they are either not required or the information is otherwise included in the consolidated financial statements.


~~(b)~~	~~Exhibits~~

(b)Exhibits

EXHIBIT INDEX



3.1(A)			Amended and Restated Certificate of Incorporation of ~~the Registrant~~Akamai Technologies, Inc., as amended

3.2(B)			Amended and Restated ~~By-Laws~~Bylaws of ~~the Registrant,~~Akamai Technologies, Inc., as amended

4.1(C)			Specimen common stock certificate

4.2(D)			Indenture (including form of Notes) with respect to Akamai’s 0%0.125% Convertible Senior Notes due ~~2019,~~2025, dated as of ~~February 20, 2014,~~May 21, 2018, between Akamai and U.S. Bank National Association, as ~~trustee.~~trustee

~~10.1(E)~~

Table of Contents


4.3(E)		~~Summary~~Indenture (including form of Notes) with respect to the Registrant’s ~~Compensatory Arrangements with Non-Executive Directors~~0.375% Convertible Senior Notes due September 1, 2027, dated as of August 16, 2019, between the Registrant and U.S. Bank National Association, as trustee

~~10.2@~~4.4(F)		~~Summary of the Registrant’s Compensatory Arrangements~~First Supplemental Indenture with ~~Executive Officers~~respect to 0.125% Convertible Senior Notes due 2025, dated December 16, 2021, between Akamai Technologies, Inc. and U.S. Bank National Association, as trustee

~~10.3(F)@~~4.5(F)		~~Second Amended~~First Supplemental Indenture with respect to 0.375% Convertible Senior Notes due 2027, dated December 16, 2021, between Akamai Technologies, Inc. and ~~Restated 1998 Stock Incentive Plan of the Registrant,~~U.S. Bank National Association, as ~~amended~~trustee

~~10.4(G)@~~4.6(B)		Description of Registrant's Securities Registered Under Section 12 of the Exchange Act

10.1(G)@		Amended and Restated 1999 Employee Stock Purchase Plan of the Registrant

~~10.5(H)~~10.2(H)@		Amendment to Amended and Restated 1999 Employee Stock Purchase Plan of the Registrant

~~10.6(I)@~~	~~2001 Stock Incentive Plan of the Registrant~~

~~Table of Contents~~



~~10.7(J)~~10.3(I)@		~~2006 Stock Incentive Plan of the Registrant~~

~~10.8(K)@~~	2009 Akamai Technologies, Inc. Stock Incentive Plan

~~10.9(L)~~10.4(J)@		~~2013~~Amended and Restated Akamai Technologies, Inc. 2013 Stock Incentive Plan ~~(as amended)~~

~~10.10(M)~~10.5(K)		~~Amended and Restated 1999 Stock Compensation Plan of Acerno Intermediate Holdings,~~Prolexic Technologie s, Inc. ~~(formerly known as I-Behavior Inc.)~~2011 Equity Incentive Plan

~~10.11(N)~~10.6(L)		~~Blaze Software Inc. Stock Option Plan~~

~~10.12(O)~~	Cotendo, Inc. Amended and Restated 2008 Stock Plan

~~10.13(P)~~10.7(M)@		~~Four Cambridge Center Lease~~Form of Restricted Stock Unit Agreement ~~dated October 1, 2007~~for use under the 2013 Stock Incentive Plan, as amended (time vesting)

~~10.14(P)~~10.8(N)@		~~Eight Cambridge Center Lease~~Form of Restricted Stock Unit Agreement ~~dated October 1, 2007~~for use under the 2013 Stock Incentive Plan (performance vesting)

~~10.15(Q)~~10.9(N)@		Form of Stock Option Agreement for use under the 2013 Stock Incentive Plan

10.10(N)		Form of Deferred Stock Unit Agreement for use under the 2013 Stock Incentive Plan

10.11(O)@		Form of Performance-Based Vesting Restricted Stock Unit Agreement with Retirement Provision

10.12@		Non-Employee Director Compensation Plan

10.13(M)@		Form of Restricted Stock Unit Agreement for use under the 2013 Stock Incentive Plan (2019)

10.14(P)@		Form Executive Bonus Plan

10.15(Q)@		Akamai Technologies, Inc. Executive Severance Pay Plan, as amended

10.16(R)@		Form of Change in Control and Severance Agreement

10.17(S)@		Akamai Technologies, Inc. Policy on Departing Director Compensation

10.18(T)@		Akamai Technologies, Inc. U.S. Non-Qualified Deferred Compensation Plan

10.19(U)@		Employment Letter Agreement between the Registrant and F. Thomson Leighton dated February 25, 2013

10.20(R)@		Amendment to ~~Lease~~Employment Letter Agreement ~~for Eight Cambridge Center~~between the Registrant and F. Thomson Leighton dated November ~~7, 2016~~12, 2015

~~10.16(Q)~~10.21(V)		~~Amendment to Lease Agreement for Four Cambridge Center dated November 7, 2016~~

~~10.17(Q)~~	Indenture of Lease for 145 Broadway, Cambridge, Massachusetts dated November 7, 2016

~~10.18(Q)~~10.22(V)		Must-Take Premises and Right of First Offer Agreement among the Registrant, Boston Properties Limited Partnership and the Trustees of Ten Cambridge Center Trust dated November 7, 2016

~~10.19~~10.23(W)		150 Broadway Real Property Lease Dated December 20, 2017

~~10.20(R)~~10.24(X)†		Exclusive Patent and Non-Exclusive Copyright License Agreement, dated as of October 26, 1998, between the Registrant and Massachusetts Institute of Technology

~~10.21(S)@~~10.25(Y)		~~Employment Letter~~Credit Agreement ~~between~~by and among Akamai Technologies, Inc., the ~~Registrant~~financial institutions identified therein as lenders, JPMorgan Chase Bank, N.A., as Administrative Agent, and ~~F. Thomson Leighton~~the other agents and arrangers party thereto, dated ~~February 25, 2013~~May 10, 2018.

~~10.22(T)@~~10.26(D)		~~Amendment to Employment Letter Agreement between the Registrant and F. Thomson Leighton dated November 12, 2015~~

~~10.23(U)@~~	~~Form of Executive Bonus Plan~~

~~10.24(V)@~~	~~Akamai Technologies, Inc. Executive Severance Pay Plan~~

~~10.25(T)@~~	~~Form of Executive Change in Control and Severance Agreement~~

~~10.26(W)@~~	~~Akamai Technologies, Inc. Policy on Departing Director Compensation~~

~~10.27(X)@~~	~~Form of Stock Option Agreement for use under the 2009 Stock Incentive Plan (four-year vest)~~

~~10.28(Y)@~~	~~Form of Restricted Stock Unit Agreement for use under the 2013 Stock Incentive Plan (time vesting)~~

~~10.29(Y)@~~	~~Form of Restricted Stock Unit Agreement for use under the 2013 Stock Incentive Plan (performance vesting)~~

~~10.30(Y)@~~	~~Form of Stock Option Agreement for use under the 2013 Stock Incentive Plan~~

~~10.31(Y)~~	~~Form of Deferred Stock Unit Agreement for use under the 2013 Stock Incentive Plan~~

~~10.32(Z)@~~	~~Form of Performance-Based Vesting Restricted Stock Unit Agreement with Retirement Provision~~

~~10.33(D)~~	Form of Call Option Confirmation between Akamai and each Option Counterparty

~~10.34(D)~~10.27(D)		Form of Warrant Confirmation between Akamai and each Option Counterparty

~~10.35(AA)@~~10.28(E)		~~Akamai Technologies, Inc. U.S. Non-Qualified Deferred Compensation Plan~~Form of Call Option Confirmation between the Registrant and each Option Counterparty

~~21.1~~10.29(E)		Form of Warrant Confirmation between the Registrant and each Option Counterparty

Table of Contents



21.1			Subsidiaries of the Registrant

23.1			Consent of Independent Registered Public Accounting Firm

31.1			Certification of Chief Executive Officer pursuant to Rule 13a- 14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

31.2			Certification of Chief Financial Officer pursuant to Rule 13a- 14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

32.1			Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~Table of Contents~~



32.2			Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS			Inline XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.*

101.SCH			Inline XBRL Taxonomy Extension Schema ~~Document~~Document*

101.CAL			Inline XBRL Taxonomy Calculation Linkbase ~~Document~~Document*

101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase ~~Document~~Document*

101.LAB			Inline XBRL Taxonomy Label Linkbase ~~Document~~Document*

101.PRE			Inline XBRL Taxonomy Presentation Linkbase ~~Document~~Document*

~~________________~~


104			Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101.INS)

________________


(A)						Incorporated by reference to the Registrant’s ~~Quarterly Report on Form 10-Q (File No. 000-27275, 701319) filed with the Commission on August 14, 2000.~~


~~(B)~~	~~Incorporated by reference to the Registrant's~~ Current Report on Form 8-K (File No. 000-27275, ~~141172551)~~18884226) filed with the Commission on ~~October 24, 2014.~~

	June 6, 2018.
~~(C)~~(B)			~~Incorporated by reference to the Registrant’s Registration Statement on Form S-1, as amended, filed with the Commission on October 13, 1999.~~


~~(D)~~	~~Incorporated by reference to the Registrant's Current Report on Form 8-K (File No. 000-27275, 14629736) filed with the Commission on February 20, 2014.~~


~~(E)~~	Incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-27275, ~~4660513)~~20670264) filed with the Commission on ~~March 3, 2014.~~

	February 28, 2020.
~~(F)~~(C)		Incorporated by reference to the Registrant’s ~~Quarterly~~Registration Statement on Form S-1 (File No. 333-85679, 99727819), as amended, filed with the Commission on October 13, 1999.
(D)		Incorporated by reference to the Registrant’s Current Report on Form ~~10-Q~~8-K (File No. 000-27275, ~~04961682)~~18852548) filed with the Commission on May 22, 2018.
(E)		Incorporated by reference to the Registration's Current Report on Form 8-K (File No. 000-27275, 191033874) filed with the Commission on August ~~9, 2004.~~

	16, 2019.
(F)		Incorporated by reference to the Registrant’s Annual Report Current Report on Form 8-K (File No. 000-27275, 211497782) filed with the Commission on December 16, 2021.
(G)		Incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-27275, 06691330) filed with the Commission on March 16, 2006.

(H)
~~(H)~~	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q (File No. 000-27275, 08823347) filed with the Commission on May 12, 2008.

(I)
~~(I)~~	~~Incorporated by reference to the Registrant’s Annual Report on Form 10-K (File No. 000-27275, 02560808) filed with the Commission on February 27, 2002.~~


~~(J)~~	~~Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-27275, 06870771) filed with the Commission on May 26, 2006.~~


~~(K)~~	Incorporated by reference to the Registrant's Current Report on Form 8-K (File No. 000-27275, 11865051) filed with the Commission on May 23, 2011.

(J)
~~(L)~~	Incorporated by reference to the ~~Registrant’s~~Registrant's Current Report on Form 8-K (File No. 000-27275, ~~17861604)~~19835721) filed with the Commission on ~~May 22, 2017.~~

	June 7, 2021.
~~(M)~~(K)						Incorporated by reference to the Registrant’s Registration Statement on Form S-8 (File No. 333-194278, 14660564) filed with the Commission on ~~November 18, 2008.~~

	March 3, 2014.
~~(N)~~(L)			~~Incorporated by reference to the Registrant’s Registration Statement on Form S-8 filed with the Commission on February 29, 2012.~~


~~(O)~~	Incorporated by reference to the Registrant’s Registration Statement on Form S-8 filed with the Commission on March 14, 2012.

(M)
~~(P)~~	Incorporated by reference to the Registrant’s ~~Annual~~Quarterly Report on Form ~~10-K~~10-Q (File No. 000-27275, ~~08655930)~~19810440) filed with the Commission on May 9, 2019.
(N)		Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q (File No. 000-27275, 131025074) filed with the Commission on August 9, 2013.
(O)		Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-27275, 15585212) filed with the Commission on February ~~29, 2008.~~6, 2015.

(P)						Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-27275, 21665537) filed with the Commission on February 23, 2021.

Table of Contents


















(Q)						Incorporated by reference to the Registrant's Current Report on Form ~~10-K~~8-K (File No. 000-27275, ~~161988699)~~191132693) filed with the Commission on ~~November 10, 2016.~~

	October 2, 2019.
(R)		Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-27275, 22680595) filed with the Commission on February 25, 2022.
(S)		Incorporated by reference to the Registrant's ~~Registration Statement~~Annual Report on ~~Form S-1~~form 10-K (File No. 000-27275, 17647667) filed with the Commission on ~~September 27, 1999.~~

	February 28, 2017.
~~(S)~~(T)		Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q (File No. 000-27275, 15850176) filed with the Commission on May 11, 2015.
(U)		Incorporated by reference to the Registrant's Annual Report on Form 10-K (File No. 000-27275, 13657899) filed with the Commission on March 1, 2013.

(V)						Incorporated by reference to the Registrant's Current Report on Form 8-K (File No. 000-27275, 161988699) filed with the Commission on November 10, 2016.
~~(T)~~(W)						Incorporated by reference to the Registrant's Annual Report on Form 10-K (File No. 000-27275, 18654889) filed with the Commission on March 1, 2018.
(X)						Incorporated by reference to the Registrant's Registration Statement on Form S-1/A filed with the Commission on October 28, 1999.
(Y)						Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-27275, ~~151238671) filed with the Commission on November 17, 2015.~~


~~(U)~~	~~Incorporated by reference to the Registrant's Annual Report on Form 10-K (File No. 000-27275, 161466754) filed with the Commission on February 29, 2016.~~


~~(V)~~	~~Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-27275, 12974652) filed with the Commission on July 23, 2012.~~


~~(W)~~	~~Incorporated by reference to the Registrant's Annual Report on form 10-K (File No. 000-27275, 17647667) filed with the Commission on February 28, 2017.~~

~~Table of Contents~~


~~(X)~~	~~Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-27275, 09851919)~~18837347) filed with the Commission on May ~~26, 2009.~~15, 2018.

_______________


~~(Y)~~@	~~Incorporated by reference~~	Management contract or compensatory plan or arrangement filed as an exhibit to ~~the Registrant's Quarterly~~this Annual Report on Form ~~10-Q (File No. 000-27275, 131025074)~~10-K pursuant to Item 15(b) of this Annual Report.
†		Confidential Treatment has been granted as to certain portions of this Exhibit. Such portions have been omitted and filed separately with the ~~Commission on August 9, 2013.~~Securities and Exchange Commission.

*		Submitted electronically herewith.

~~(Z)~~(c)	~~Incorporated by reference to the Registrant’s Current Report on Form 8-K (File No. 000-27275, 15585212) filed with the Commission on February 6, 2015.~~


~~(AA)~~	~~Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q (File No. 000-27275, 15850176) filed with the Commission on May 11, 2015.~~

~~_______________~~

~~@ Management contract or compensatory plan or arrangement filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) of this Annual Report.~~

~~† Confidential Treatment has been granted as to certain portions of this Exhibit. Such portions have been omitted and filed separately with the Securities and Exchange Commission.~~


~~(c)~~	Not applicable.

Item 16. Form 10-K Summary

None.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


February 28, 2022			AKAMAI TECHNOLOGIES, INC.

~~March 1, 2018~~			~~AKAMAI TECHNOLOGIES, INC.~~

	By:	/s/ ~~JAMES BENSON~~EDWARD MCGOWAN
				~~James Benson~~ Edward McGowan Executive Vice President, Chief Financial Officer and Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ F. THOMSON LEIGHTON

Chief Executive Officer and Director (Principal Executive Officer)

February 28, 2022

F. Thomson Leighton

~~Signature~~/s/ EDWARD MCGOWAN

~~Title~~Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)

~~Date~~February 28, 2022

Edward McGowan

/s/ ~~F. THOMSON LEIGHTON~~LAURA HOWELL

Chief ~~Executive~~Accounting Officer ~~and Director~~ (Principal ~~Executive~~Accounting Officer)

~~March 1, 2018~~February 28, 2022

~~F. Thomson Leighton~~ Laura Howell

/s/ ~~JAMES BENSON~~SHARON Y. BOWEN

~~Chief Financial Officer (Principal Financial and Accounting Officer)~~Director

~~March 1, 2018~~February 28, 2022

~~James Benson~~ Sharon Y. Bowen

/s/ ~~GEORGE H. CONRADES~~ MARIANNE C. BROWN

Director

~~March 1, 2018~~February 28, 2022

~~George H. Conrades~~ Marianne C. Brown

~~/s/ PAMELA J. CRAIG~~

~~Director~~

~~March 1, 2018~~

~~Pamela J. Craig~~

/s/ MONTE E. FORD

Director

~~March 1, 2018~~February 28, 2022

Monte E. Ford

/s/ JILL A. GREENTHAL

Director

~~March 1, 2018~~February 28, 2022

Jill A. Greenthal

/s/ DANIEL R. HESSE

Director

~~March 1, 2018~~February 28, 2022

Daniel R. Hesse

/s/ PETER T. KILLALEA

Director

February 28, 2022

Peter T. Killalea

/s/ JONATHAN FF. MILLER

Director

~~March 1, 2018~~February 28, 2022

Jonathan F. Miller

/s/ ~~PAUL SAGAN~~MADHU RANGANATHAN

Director

~~March 1, 2018~~February 28, 2022

~~Paul Sagan~~ Madhu Ranganathan

~~/s/ FREDERIC V. SALERNO~~

~~Director~~

~~March 1, 2018~~

~~Frederic V. Salerno~~

~~/s/ NAOMI O. SELIGMAN~~

~~Director~~

~~March 1, 2018~~

~~Naomi O. Seligman~~

/s/ BERNARDUS VERWAAYEN

Director

~~March 1, 2018~~February 28, 2022

Bernardus Verwaayen

/s/ WILLIAM R. WAGNER

Director

February 28, 2022

William R. Wagner

9097



Delaware						04-3432319
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ~~$.01~~- par value $0.01 per share	~~NASDAQ~~AKAM	Nasdaq Global Select Market



	2017				2016
	High		Low		High		Low
First quarter	$	71.64	$	59.50	$	57.05	$	39.43
Second quarter	$	62.58	$	46.81	$	57.50	$	48.88
Third quarter	$	53.45	$	44.65	$	58.47	$	47.80
Fourth quarter	$	68.03	$	48.72	$	71.04	$	52.63



Period⁽¹⁾	Total Number of Shares Purchased⁽²⁾	Average Price Paid per Share⁽³⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽⁴⁾	Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs⁽⁴⁾
October 1, 2017 – October 31, 2017	773,304	$	50.69	773,304	$	348,673
November 1, 2017 – November 30, 2017	126,618	53.97		126,618	341,839
December 1, 2017 – December 31, 2017	144,838	58.90		144,838	333,309
Total	1,044,760	$	52.23	1,044,760	$	333,309


Period(1)	Total Number of Shares Purchased(2)	Average Price Paid per Share(3)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(4)	Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs(4)
October 1, 2021 – October 31, 2021	362,034	$	105.22	362,034	$	282,542
November 1, 2021 – November 30, 2021	704,875	110.45		704,875	204,691
December 1, 2021 – December 31, 2021	1,373,341	112.90		1,373,341	49,637
Total	2,440,250	$	111.05	2,440,250



þ☑			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



¨☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


PART I

~~PART I~~

Item 1.	Business		3
Item 1A.		Risk Factors		109
Item 1B.		Unresolved Staff Comments		2122
Item 2.		Properties		2122
Item 3.		Legal Proceedings		2122
Item 4.		Mine Safety Disclosures		22

PART II

Item 5.		Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		2223
Item 6.		~~Selected Financial Data~~[Reserved]		23
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		2423
Item 7A.		Quantitative and Qualitative Disclosures About Market Risk		45
Item 8.		Financial Statements and Supplementary Data		4647
Item 9.		Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		8491
Item 9A.		Controls and Procedures		8491
Item 9B.		Other Information		8592
Item 9C.		Disclosure Regarding Foreign Jurisdictions that Prevent Inspections		92
~~PART III~~
PART III

Item 10.		Directors, Executive Officers and Corporate Governance		8592
Item 11.		Executive Compensation		8593
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		8693
Item 13.		Certain Relationships and Related Transactions, and Director Independence		8693
Item 14.		Principal Accounting Fees and Services		8693

PART IV

Item 15.		Exhibits, Financial Statement Schedules		8693
Item 16.		Form 10-K Summary		8996

SIGNATURES				9097


~~(1)~~	~~Information is based on settlement dates of repurchase transactions.~~


~~(2)~~	~~Consists of shares of our common stock, par value $0.01 per share.~~


~~(4)~~	~~In February 2016, the Board of Directors authorized a $1.0 billion share repurchase program effective from February 2016 through December 2018.~~



Year ended December 31,	2017		2016		2015		2014		2013
Revenue	$	2,502,996	$	2,340,049	$	2,197,448	$	1,963,874	$	1,577,922
Total costs and operating expenses	2,186,777		1,880,455		1,731,298		1,474,355		1,163,954
Income from operations	316,219		459,594		466,150		489,519		413,968
Net income	218,321		316,132		321,406		333,948		293,487
Basic net income per share	1.27		1.81		1.80		1.87		1.65
Diluted net income per share	1.26		1.79		1.78		1.84		1.61
Cash, cash equivalents and marketable securities	1,279,528		1,616,329		1,524,235		1,628,284		1,246,922
Total assets	4,602,844		4,373,146		4,181,684		4,001,546		2,957,685
Convertible senior notes	662,913		640,087		624,288		604,851		—
Other long-term liabilities	165,304		134,101		110,319		117,349		65,088
Total stockholders’ equity	3,310,723		3,224,370		3,120,878		2,945,335		2,629,431


	Payments Due by Period
	Total		Less than 12 Months		12 to 36 Months		36 to 60 Months		More than 60 Months
Operating lease obligations: (1)
Real estate arrangements	$	784,239	$	80,070	$	153,089	$	134,800	$	416,280
Co-location arrangements	245,468		97,494		89,370		37,964		20,640
Bandwidth agreements	126,223		102,144		24,079		—		—
Open vendor purchase orders	315,379		226,926		88,162		291		—
Convertible senior notes	2,300,000		—		—		1,150,000		1,150,000
Total contractual obligations	$	3,771,309	$	506,634	$	354,700	$	1,323,055	$	1,586,920



(in thousands, except share data)	December 31, 2017			December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	313,382		$	324,169
Marketable securities	398,554			512,849
Accounts receivable, net of reserves of $1,279 and $6,145 at December 31, 2017 and 2016, respectively	459,127			368,596
Prepaid expenses and other current assets	137,809			104,303
Total current assets	1,308,872			1,309,917
Property and equipment, net	862,535			801,017
Marketable securities	567,592			779,311
Goodwill	1,498,688			1,228,503
Acquired intangible assets, net	201,259			149,463
Deferred income tax assets	51,069			8,982
Other assets	112,829			95,953
Total assets	$	4,602,844		$	4,373,146
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	80,278		$	76,120
Accrued expenses	283,743			238,777
Deferred revenue	77,705			52,972
Other current liabilities	22,178			6,719
Total current liabilities	463,904			374,588
Deferred revenue	6,839			3,758
Deferred income tax liabilities	15,510			11,652
Convertible senior notes	662,913			640,087
Other liabilities	142,955			118,691
Total liabilities	1,292,121			1,148,776
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 700,000 shares designated as Series A Junior Participating Preferred Stock; no shares issued or outstanding	—			—
Common stock, $0.01 par value; 700,000,000 shares authorized; 169,893,324 and 173,254,797 shares issued and outstanding at December 31, 2017 and 2016, respectively	1,699			1,733
Additional paid-in capital	4,073,362			4,239,588
Accumulated other comprehensive loss	(21,930		)	(56,222		)
Accumulated deficit	(742,408		)	(960,729		)
Total stockholders’ equity	3,310,723			3,224,370
Total liabilities and stockholders’ equity	$	4,602,844		$	4,373,146



	Net Cash Provided by Operating Activities				Net Cash Used in Financing Activities
	As Reported		As Adjusted		As Reported			As Adjusted
Year ended December 31, 2016	$	866,298	$	871,812	$	(354,265	)	$	(359,779	)
Year ended December 31, 2015	764,151		793,452		(267,728		)	(297,029		)


~~(3)~~	~~Includes commissions paid.~~



	Other Liabilities: Contingent Consideration Obligation
Balance, January 1, 2016	$	—
Contingent consideration obligation related to Soha acquisition	(1,600		)
Contingent consideration obligation related to Cyberfend acquisition	(5,500		)
Balance, December 31, 2016	$	(7,100	)
Fair value adjustment to contingent consideration included in general and administrative expense	(2,781		)
Cash paid upon achievement of milestone	1,250
Balance, December 31, 2017	$	(8,631	)



	December 31, 2017			December 31, 2016			Estimated Useful Life
Computer and networking equipment	$	1,292,587		$	1,170,471		3-7
Purchased software	61,276			51,727			3-10
Furniture and fixtures	48,521			41,968			5
Office equipment	26,949			24,497			3-5
Leasehold improvements	152,487			139,991			1-16
Internal-use software	765,162			656,053			2-7
Property and equipment, gross	2,346,982			2,084,707
Accumulated depreciation and amortization	(1,484,447		)	(1,283,690		)
Property and equipment, net	$	862,535		$	801,017



Total purchase consideration	$	180,327

Allocation of the purchase consideration:
Cash	$	8,455
Accounts receivable	9,845
Prepaids and other current assets	1,481
Identifiable intangible assets	32,800
Goodwill	133,754
Fixed assets	2,169
Deferred tax assets	11,398
Other assets	19
Total assets acquired	199,921
Accounts payable	(1,460		)
Accrued liabilities	(3,306		)
Deferred revenue	(14,828		)
Total liabilities assumed	(19,594		)
Net assets acquired	$	180,327



	Gross Carrying Amount		Weighted Average Useful Life
Completed technologies	$	7,200	2.2
Customer-related intangible assets	24,300		6.5
Trademarks	1,100		3.7
Non-compete agreements	200		1.5
Total	$	32,800



Total purchase consideration	$	199,280

Allocation of the purchase consideration:
Cash	$	1,935
Accounts receivable	4,108
Prepaids and other current assets	1,143
Identifiable intangible assets	49,900
Goodwill	125,584
Deferred tax assets	31,206
Total assets acquired	213,876
Accounts payable	(1,119		)
Accrued liabilities	(3,915		)
Deferred revenue	(9,562		)
Total liabilities assumed	(14,596		)
Net assets acquired	$	199,280



Total purchase consideration	$	107,047

Allocation of the purchase consideration:
Cash	$	664
Accounts receivable	1,976
Other current assets	393
Identifiable intangible assets	41,950
Goodwill	69,445
Deferred tax assets	5,230
Total assets acquired	119,658
Other current liabilities	(1,983		)
Current deferred revenue	(770		)
Deferred tax liabilities	(9,858		)
Total liabilities assumed	(12,611		)
Net assets acquired	$	107,047



	December 31, 2017		December 31, 2016
Deferred rent	$	31,510	$	29,668
Uncertain tax positions	86,814		73,231
Other long-term liabilities	24,631		15,792
Total	$	142,955	$	118,691



	Employee Severance and Related Benefits			Software Charges			Excess Facilities, Contract Terminations and Other			Total
Balance January 1, 2015	$	—		$	—		$	281		$	281
Costs incurred	767			—			—			767
Cash disbursements	(605		)	—			(56		)	(661		)
Balance December 31, 2015	162			—			225			387
Costs incurred	5,714			4,587			—			10,301
Cash disbursements	(4,432		)	—			(56		)	(4,488		)
Software charges	—			(4,587		)	—			(4,587		)
Balance December 31, 2016	1,444			—			169			1,613
Costs incurred	17,311			31,965			5,608			54,884
Cash disbursements	(5,898		)	—			(3,212		)	(9,110		)
Software and other non-cash charges	—			(31,965		)	(1,179		)	(33,144		)
Balance December 31, 2017	$	12,857		$	—		$	1,386		$	14,243



2018	$	50,187
2019	49,418
2020	61,031
2021	58,680
2022	56,211
Thereafter	481,471
Total	$	756,998



	Bandwidth and Co-location Commitments		Purchase Order Commitments
2018	$	108,988	$	93,385
2019	27,304		6,175
2020	817		3,205
2021	—		1,385
2022	—		1,190
Thereafter	—		—
Total	$	137,109	$	105,340



	Units (in thousands)		Weighted Average Grant Date Fair Value
Outstanding at January 1, 2017	164		$	44.90
Granted	44		47.50
Vested and distributed	(31	)	54.97
Outstanding at December 31, 2017	177		$	43.77